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The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.


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December 07, 2005


Good Inflation News

Except for the Skeptical Speculator, I haven't seen much commentary on yesterday's third-quarter productivity and costs report from the Bureau of Labor Statistics.  Skeptical indicates that this "is more evidence that the US economy remains strong," but the costs part of the report caught my eye.  From Bloomberg:

Annual labor costs rose at the slowest pace in a year as businesses focused on efficiency with fuel prices above year-ago levels. Contained labor costs and the jump in productivity may reassure the Federal Reserve that inflation pressures are not accelerating, economists said.

Has the Bank of Canada spotted the trend?

UPDATE: Kevin Drum emphasizes the downside of this observation (hat tip, Brad DeLong).
 

December 7, 2005 in Data Releases , Inflation | Permalink

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Dave,

Here's what some individuals are not "cheering" about:

PRODUCTIVITY AND COSTS
Third Quarter 2005, revised
Bureau of Labor Statistics

1. Business Sector Productivity

"Real hourly compensation, which takes into account changes in consumer prices, fell 0.8 percent in the third quarter and [fell] 4.0 percent in the second quarter."

2. Nonfarm Business Productivity

"When the rise in consumer prices is taken into account, real hourly compensation declined 1.4 percent in the third quarter of 2005 and [declined] 3.1 percent one quarter earlier."

3. Manufacturing Productivity

"When the increase in consumer prices is taken into account, real hourly compensation for all manufacturing workers fell 1.9 percent in the third quarter."

"Real hourly compensation dropped 0.4 percent rather than rising, after revision", in the second quarter.

4. Nonfinancial Corporations' Productivity

"When the rise in consumer prices is taken into account, real hourly
compensation fell 0.6 percent in the third quarter."

"Hourly compensation also was revised down, from 3.7 to 0.8
percent", in the second quarter. Real hourly compensation declined
3.2% during the second quarter.


All part of the revised American economy under the advanced global trade model.

Posted by: Movie Guy | December 08, 2005 at 08:12 PM

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