The Busheconomy continues it’s journey to the crapper.
The productivity of American workers slowed even more sharply than first thought in the first three months of this year; wage pressures eased from the fourth quarter, although they were much higher than originally thought.
The Labor Department reported Wednesday that the amount of output per hour of work for non-farm businesses rose at an annual rate of 1% in the January-March quarter. That was the slowest advance since the third quarter of last year and was below the government’s initial estimate that productivity rose at a 1.7% annual rate in the first quarter.
Labor costs rose at an annual rate of 1.8%. That was up from an initial estimate of 0.6% growth in unit labor costs but was still lower than the 8.9% surge reported in the final three months of last year.
While higher wages are good for workers, increases that outstrip the growth of productivity can trigger unwanted inflation as employers are forced to boost the cost of their products to meet their higher payroll costs.
The revision to productivity in the first quarter reflected the sharp downward revision to overall economic growth, which got slashed to 0.6% from an initial estimate of 1.3%.