The Danger in Not Becoming a Strain

Despite Asia’s problems, Orange County’s economy is riding high, largely because of the continuing strength in the national economy--where most of our goods are sold--and low interest rates, Adibi said.

But, almost paradoxically, Federal Reserve Board Governor Roger Ferguson warned Tuesday of the danger ahead if Asia’s financial crisis does not become a drag on the nation’s economy. Ferguson said the tight labor market and strong domestic demand might kindle inflation. Unless Asia’s problems slow the economy, the Fed might be forced to raise interest rates to keep inflation in check, he said.

“The risk we now face is that Asia will slow us down less than we thought,” he said.

*

Patrice Apodaca covers economic issues for The Times. She can be reached at (714) 966-5979 and at patrice.apodaca@latimes.com