Well, This Won’t Fit The Narrative — Bidenomics And The Goldilocks Economy — November 2, 2023

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The cost of labor unexpectedly declined in the third quarter, providing at least some relief on the inflation front. 

Unit labor costs, a measure of hourly compensation against productivity, fell 0.8% for the July-through-September period at a seasonally adjusted rate. Economists surveyed by Dow Jones had been looking for a gain of 0.7%. Holy mackerel.

On a 12-month basis, unit labor costs increased 1.9%. The breakdown reflected a 3.9% increase in hourly compensation, offset by a 4.7% rise in productivity. 

That increase in productivity also was more than expected, beating the Dow Jones estimate for a rise of 4.3% for the biggest quarterly gain since the third quarter of 2020. Is anyone paying attention? 

Output climbed 5.9%, while hours worked rose 1.1%. The developments come as the Federal Reserve is seeking to tamp down inflation through a series of interest rate increases. 

On Wednesday, Fed Chair Jerome Powell said wage gains “have really come down significantly over the course of the last 18 months to a level where they’re substantially closer to that level that would be consistent with 2% inflation over time,” the central bank’s target.

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And So It Goes

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