{"id":1517,"date":"2019-05-02T11:52:08","date_gmt":"2019-05-02T15:52:08","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1517"},"modified":"2019-05-02T11:52:08","modified_gmt":"2019-05-02T15:52:08","slug":"first-quarter-productivity-april-layoff-notices-and-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1517","title":{"rendered":"First Quarter Productivity, April Layoff Notices and Weekly Jobless Claims"},"content":{"rendered":"\n

KEY DATA:<\/strong> Productivity: +3.6%;\nOver-Year: 2.4%; Labor Costs: -0.9%; Over-Year: 0.1%\/ Layoffs: 40,023\/ Claims: Unchanged<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe rebound in productivity is restraining\nlabor costs and keeping inflation in check.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong> With\nwages rising, it has been unclear why inflation remains tame.  One logical explanation is the rapid increase\nin productivity.<\/em><\/strong>  The growth\nin the first quarter was the strongest in over four years and over the year, it\nwas the best in nearly nine years.<\/em><\/strong> \nOutput was up sharply while hours worked rose only modestly.  The improved production of workers more than\noffset the moderate gain in wages.  <\/em><\/strong>Indeed,\nwage increases have been decelerating for the past year and a half, even as\nproductivity was accelerating.  So much\nfor the theory that rising productivity leads to improved wage gains.  <\/p>\n\n\n\n

Challenger, Gray and Christmas reported that layoff\nnotices in April were up sharply (9%) from the previous April.<\/em><\/strong>  So far this year, plans to cut workers have\nincreased by thirty one percent.  The\nindustrial goods sector notices have soared this year, while retail, which is\nstill cutting people like crazy, is doing so at a much slower pace than in\n2018. <\/p>\n\n\n\n

Jobless claims remained at a really low, but no\nlonger record low level, last week.<\/em><\/strong> The new claims numbers still point to a tight labor\nmarket.  <\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong>  The\nFed noted yesterday that inflation was running below target but chalked it up\nto transitory factors.  That may be true,\nbut fears that inflation may surge are unrealistic unless the improvement in\nworker productivity fades.<\/em><\/strong>  Businesses\nare managing to pass through only part of the productivity increases to workers,\nwhich is allowing them to keep profits rising and prices down.  While firms have some wiggle room to\ncontinue raising wages, that will be the case only if productivity remains\nstrong.  If it starts easing back toward\nthe longer-term trend, pressures on earnings and\/or prices will rise.<\/em><\/strong>  But until that happens, the Fed will have to\ncontend with inflation that is at best, fairly close to its target and I\nsuspect the members would not mind seeing it run hot for a while.  Indeed, I suspect that one factor they\nbelieve is \u201ctransitory\u201d is the unusually high level of productivity\ngrowth.  If that is the case, I would\nhave to agree that it is more likely productivity will moderate than remain at current\nlevels.  Thus, investors will likely have\nto wait quite a while before they see a rate cut.<\/em><\/strong> I don\u2019t expect any easing\nin policy unless the economy fades significantly, which might not come until\nnext year \u2013 or later.  <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Productivity: +3.6%; Over-Year: 2.4%; Labor Costs: -0.9%; Over-Year: 0.1%\/ Layoffs: 40,023\/ Claims: Unchanged IN A NUTSHELL:  \u201cThe rebound in productivity is restraining labor costs and keeping inflation in check.\u201d WHAT IT MEANS: With wages rising, it has been unclear why inflation remains tame.  One logical explanation is the rapid increase in productivity.  The … Continue reading First Quarter Productivity, April Layoff Notices and Weekly Jobless Claims<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1517","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1517","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1517"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1517\/revisions"}],"predecessor-version":[{"id":1518,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1517\/revisions\/1518"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1517"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1517"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1517"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}