The Stag In Stagflation! Non-farm Productivity In Q1 Grew At A Measly 0.3% Annuaized While Unit Labor Costs Soared 4.7%

Confounded Interest ^ | 05/02/2024 | Anthony B. Sanders

[Kaiser8408a]

Fed Chair Powell yesterday said he doesn’t see the “stag” in stagflation. Really?

Well, in Q1 in the US… it failed to show up as non-farm productivity – or nonfarm employee output per hour – rose at a measly 0.3% annualized rate after an upwardly revised 3.5% gain in the prior period (well below expectations)…

Source: Bloomberg

On the flip-side of that – and echoing the market-worrying ECI data earlier this week – Unit Labor Costs soared 4.7% in Q1 (well above the 4.0% expected and the 0.4% rise in Q4)…

Source: Bloomberg

So wage inflation is confirmed – rising at the fastest pace in a year – as all the gains we have been told to expect from AI just aren’t there in the data.

While quarterly productivity figures are quite volatile, a sustained slowdown represents another hurdle for the Federal Reserve’s inflation fight. With interest rates expected to stay at a two-decade high for awhile longer, business investment in equipment will likely continue to be a weak factor in overall economic growth.

Today’s data corroborates other data that showed gross domestic product cooled in the first quarter while employment costs rose by the most in a year. As a result, inflation is proving stubborn, supporting the Fed’s pivot to a more hawkish stance that will keep interest rates higher for longer than anticipated.

Of course, Fed Chair Powell told us yesterday that he “doesn’t see the stag or the flation” in US data…

Perhaps Cazadores tequila should be the official drink of the Biden Administration. It has the “stag” on the label and it is produced in Mexico … who Biden can’t (or won’t) stand up to.

Tequila!

[adorno]

Let’s see...

Sounds like higher wages chasing fewer goods. Or more money in the economy chasing fewer goods.

Where have I heard that before? Oh yes! During all the inflation discussions. Higher wages always lead to higher prices for goods and services. Clearly, there are no economists at government levels that understand how inflation occurs, or they don’t care about doing something abut it. Just let things happen and hopefully the problem will go away on its own. Head in the ground leaders.

[Diana in Wisconsin]

"Today’s data corroborates other data that showed gross domestic product cooled in the first quarter while employment costs rose by the most in a year. As a result, inflation is proving stubborn, supporting the Fed’s pivot to a more hawkish stance that will keep interest rates higher for longer than anticipated."

Perhaps we should all start wearing these again!

Or follow Truman's lead and issue garden seeds to all Americans so they won't starve to death?

[rhinohunter]

or they don’t care about doing something abut it

… or they don’t dare say anything about it.

[joshua c]

that 34t is getting cheaper by the day

[poinq]

There are two growth industries in America today. Everything else is shrinking. Health care is growing because boomers are retiring and getting old. This will curtail in a decade. Then it will begin to shrink quickly. Then there is government and the NGOs (Non Government Organizations) and GSEs (Government Sponsored Entities). These two groups and other government vendors represent a massive amount of our economy. They are why the economy is growing. Its all government spending. And its far more than taxes coming in. In fact the spending has little to do with the taxes. They are uncoupled. One has nothing to do with the other. Taxing is a way to control and limit growth. And spending is a way to support work in a certain area. We no longer have a market based economy. We are totally a government based (centrally controlled) economy with a little free market handling the grey areas.

Even things like Tesla and SpaceX are centrally controlled. They would not exist if it were not for government funding. The free market would not have let them grow. They are both the products of government plans. And that is why they don’t quite have a client base which is large enough to support their products into the future.

[griswold3]

“Taxing is a way to control and limit growth“
Preach!