Productivity Up, But Inflation Still Looms

Escalating cost of labor helps drag down growing economy
By Heather McPherson,  Newser User
Posted Aug 7, 2007 12:54 PM CDT
Federal Reserve Board Chairman Ben Bernanke testifies on Capitol Hill in Washington, Thursday, July 19, 2007, as he delivers his semi-annual monetary report to the Senate Banking Committee. (AP Photo/Dennis...   (Associated Press)
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(Newser) – US productivity increased last quarter, but analysts are still worried about the economy’s ability to grow while keeping inflation at bay. Nonfarm business productivity rose by 1.8%, beating the first quarter’s rate of 0.7%, but the government was forced to lower productivity estimates for previous years, the Wall Street Journal reports.

Unit labor costs, which help measure the threat of inflation, also grew 2.1% in the second quarter. If productivity and labor costs are out of sync, companies may pass higher costs on to consumers. Today's new numbers and lower estimates continue to provoke questions about the economy’s resilience against inflation.