Wednesday, December 05, 2007

It's the Economy, Stupid

Productivity Is Revised Higher, But Gains Could Be Temporary - OK everyone (with the possible exception of Democratic Presidential Candidates) is celebrating the fact that US productivity is up and labor costs are down.
Nonfarm business productivity swelled at a 6.3% annualized rate between July and September, the Labor Department said Wednesday, up from the previous estimate of a 4.9% increase. Last quarter's gain was the biggest in four years and nearly triple the 2.2% rate in the second quarter. Productivity is defined as output per unit of labor.
With labor costs down, and productivity up, there are fewer inflation fears. This is good because the Fed tends to get its collective knickers in a knot over inflation.

Productivity was driven by an increase in output.
Nonfarm business output surged 5.7% during the third quarter, the Labor Department said in Wednesday's report, reflecting the recent upward revision to third quarter gross domestic product. Hours worked fell 0.6%, the steepest drop since early 2003.
And before the Left tries to say that this was all on the backs of the poor worker...
Hourly compensation increased 4.2% last quarter. Real compensation, adjusted for inflation, rose 2.3%.
"A rising tide lifts all boats."

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