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Inflation Fears Unfounded?

The Federal Reserve Board hiked interest rates a quarter of a point Tuesday to hold off inflation, but some economists believe board chairman Alan Greenspan has nothing to worry about, reports CBS News Business Correspondent Anthony Mason.

"There really isn't any sign of inflation, any risk of inflation as we look ahead," says economist Larry Chimerine.

For all the Fed's fears, says Chimerine, prices are barely budging. Sure, Americans are still on a shopping spree, but there are too many stores competing for your business.

"In almost every single industry, no one has the power to raise prices anymore," says Chimerine.

They know that in the specialty food business, where the Fillo factory of Dumont, New Jersey faces heavy competition.

Fillo owner Ron Rexroth says, "We don't really have the ability to go tell the consumer that we want more money."

So Rexroth has streamlined his factory and redesigned his dough machine to make twice as much dough as its predecessor.

His 65 workers are more productive than ever, and yes, Ron's making more dough.

"With increasing competition today, there's no other way to survive," he says.

The Fillo factory is part of a productivity revolution in the U.S. Output for every hour worked is growing twice as fast as it did in the 1980s. But with unemployment at historic lows, chairman Greenspan has been worried that wage inflation would kick in. So far, it hasn't.

So why aren't wages going up?

Economist Rosanne Cahn, says it's "because companies are in the catbird seat. Companies set wages. Workers have no say."

Weaker unions are one reason, says Cahn, and all these factors can stall inflation, while the economy roars ahead.

"Grow is not a four letter word," she says. "It is just fine to grow rapidly, more rapidly than the Fed thinks without inflation picking up."

What, then, is Mr. Greenspan worried about?

The Fed wants to close off any possibility of inflation coming back. But most economists polled today believe this will be the last rate hike -- at least for this year.