More Than...Less Than...

I'm am going to start a more than/less than series. This is going to be a series of post regarding how often "economists" have been overly optimistic in their prediction, or the economy is just that much worse than expected. Each post will begin with a direct quote from Bloomberg as these statistics come out. Here we go...

"U.S. workers were less productive last quarter than initially estimated and labor costs jumped, raising the risk of faster inflation."

Productivity measures how much work an employee does in one hour of work. The productivity is down from a 3% annual rate to a 1.6% annual rate. That statistic is from the labor department. They also said labor costs rose 6.6%.

You know who really hates this news? The Fed. They really want to cut interest rates, probably this summer some time. Inflationary news makes a rate cut by the feds harder and harder to justify. Also, it looks like we might be heading towards a stagflation. Every statistic that has come out in the last month has shown increasing inflation and decreasing productivity.

In conclusion, rising labor costs and decreasing productivity is not good news.