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A Stop in Production for American Workers

As wages were rising at the fastest rate in more than 20 years, the productivity of American workers came to an abrupt halt this past summer. These particular circumstances will likely lead to a raise in inflation which is raising major concerns at the Federal Reserve. According to a report from the Labor Department, productivity, which is measured by the amount of output per hour of work, showed no change in the July-September quarter, while labor costs rose by 3.8 percent. Over the past year, labor costs and wages are up by 5.3 percent, which is the fastest increase since 1982.

If companies decide to pass on their higher payroll costs by boosting the price of their products, that could translate into increased inflation. And while rising wages and benefits are music the ears of workers, they do raise concerns about inflation, especially at a time when productivity is slowing down. Business orders to factories for manufactured products rose by 2.1 percent in September, this is the biggest increase in six months. However, practically all of the strength came in a surge in orders for commercial aircraft.

The increase in durable goods, which was modified up from an initial estimate last week of a 7.8 percent gain, reflects a huge 189.7 percent surge in demand for commercial aircraft. The Commerce Department also stated that orders for long-lasting durable goods were up 8.3 percent. This offset a 4.6 percent drop in demand for gasoline, food, and other nondurable products. The drop in nondurable goods was attributed in part to lower prices for petroleum products. It seems that it was not business as usual regarding economic changes within the US.