The Labor Department released its report saying that American worker productivity slowed in growth over the first quarter, with only a gain of 1 percent. That was the slowest rate-of-growth since the third quarter of last year, and far below the estimated 1.7 percent the government expected.
Worker productivity has declined steadily as it was 1.6 last year and increased by 2.1 in 2005.
The good news is that wages also eased up from the huge increase of the last quarter of 2006 which gained a huge 8.9 percent. This quarter they rose at a much more modest 1.8 percent annual rate, still up from the expected 0.6 percent.
For now this means that inflation is still under control.
How it works is if worker productivity decreases while wages increase, it ends up forcing companies to increase their prices to make up for the higher payroll. The 
result can be a period of inflation until productivity increases and prices become more stable.
The government also released an updated economic forecast that projects the ecomony should grow by about 2.3 percent for the year.
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The Labor Department released its report saying that American worker productivity slowed in growth over the first quarter, with only a gain of 1 percent. That was the slowest rate-of-growth since the third quarter of last year, and far below the estima... [Read More]
Tracked on: June 6, 2007 5:22 PM | Permalink to Trackback