Increasing Productivity Rate Comes With a Threat of Inflation

The U.S. worker productivity rate rose faster than anticipated in the July-September quarter which could, but not necessarily, lead to potential wage increases for workers. The country’s output per hour of work increased at a 2 percent annual rate.

An increase in productivity may be a sign of economic growth which could lead to increased profits for companies and sometimes higher wages for workers. However, increased wages can also trigger inflation. The Department of Commerce reported that the price index for personal expenditures rose 1.4 percent over the year as well. Currently, the inflation rate is still below 2 percent. However, if this number goes up, the Fed will need to take action.

The numbers are projecting that the U.S. economy can grow without the threat of inflation. I think that’s very key,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

The growth rate during the July-September period was also slower than in the previous quarter’s revised 2.9 percent annual rate. Analysts forecast productivity to rise 1.5 percent in the third quarter, according to Reuters data.

Read more here – “US Productivity Suggests Economy Can Grow ‘Without The Threat Of Inflation’,” (Jessica Menton, International Business Times).

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Anna is a current student at The George Washington University in Washington, DC with a concentration in Marketing and Communication. She specializes in social media outreach and has experience working in government contracting.

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