Surprisingly Good Productivity, Jobs, Inflation And Trade News
Inflation data released by the Bureau of Economic Analysis on Monday was much lower than expected, even though the job market is tight, and wages are rising. In addition, Treasury Secretary Steven Mnuchin said in a TV interview that he expected a finalized U.S. trade agreement with China next week, averting a trade war with the world's No. 2 economy.
The Congressional Budget Office, the nonpartisan research arm of the legislative branch of the federal government, projects productivity will grow 1.8% annually through 2029, and the productivity rate for the past five years annually averaged just 1.3%. In contrast, newly released data shows that productivity surged at a quarterly annualized rate of 3.6% for the period ended March 31st. That's twice the long-term rate projected by the CBO.
Productivity enables employers to pay higher wages without raising their costs. Wages were up 2.8%, according to the latest Bureau of Economic Analysis figures ended March 31st, 2019, but the 3.6% productivity gain more than offset the cost of rising wages and benefits. Wages and benefits are the biggest causes of inflation, but companies are finding that rising wages are offset by productivity gains.
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