Productivity bump another step toward inflation hope

Beyond lowering inflation pressures, rising productivity leaves more room for wage gains since each worker hour is providing more goods and services. — Reuters

US worker productivity gains running well above the long-term average may help buttress the Federal Reserve’s (Fed) faith that inflation is contained and further open the door to interest rate cuts policymakers anticipate will start in coming months.

Output per worker, a key gauge of how fast the economy can grow without rising inflation, increased 3.2% in the last quarter of 2023, the third quarter of productivity gains above 3% in a series that averaged about 1% from 2010 through 2019.