- - Monday, April 25, 2011

FEDERAL RESERVE

Inflation is next worry as economy gains strength

The Federal Reserve is increasingly confident in the economy and is about to end a $600 billion program to support it. Now for the next step: figuring out how to keep inflation from taking off.

Since late last year, the Fed has bought government bonds to keep interest rates low. Fed Chairman Ben S. Bernanke and his colleagues are expected to signal this week that they will allow the program to expire as scheduled in June.

The end of the bond-buying program would mean that, aside from tax cuts, almost all of the extraordinary measures that the government took to prop up the economy are over. Congress is fighting over how deeply to cut federal spending, not whether to spend more for stimulus.

Since the Fed announced the plan in August, worries that the economy would fall back into recession have all but disappeared. The private sector is adding jobs, and the stock market is at its highest point since the summer of 2008.

But higher oil and food prices pose a threat. If companies are forced to raise prices quickly to make up for escalating costs, that could start a spiral of inflation. Exactly how much of a threat inflation poses to the economy right now is a matter of disagreement within the central bank.

LABOR

Arizona, South Dakota sued over union laws

The National Labor Relations Board says it will move ahead with lawsuits against Arizona and South Dakota over state constitutional amendments that require secret-ballot elections to form unions.

The move was announced after weeks of negotiations that failed to reach a settlement between the federal government and attorneys general for the two states.

The agency says the amendments conflict with federal law that gives employers the option to recognize a union if a majority of workers simply sign cards that support unionizing.

Both states say they plan to vigorously defend the changes to their state constitutions approved by voters on Nov. 2.

The agency also had threatened to sue South Carolina and Utah over the same issue. Federal officials say they reserve the right to bring those cases later.

AIRLINES

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