Holy cow! U.S. economic output per worker (labor productivity) grew at a 4.3 percent annual rate in the second quarter, the Labor Department said this morning. That's the third-best quarterly showing in four years. The figure was a sharp upward revisions from previous estimates. Rising productivity means more production from each laborer, which means higher corporate profits and (theoretically) higher wages. When you can produce more stuff (whether it's opening bank accounts or making steel) with each hour of labor, theoretically you should be paid more.

True, most productivity gains the past 10 years have accrued to profits, not wages and salaries. Even so, healthy productivity gains are preferable to the opposite under any circumstances. When productivity flags, so does total output. When productivity flags, inflation and high interest rates kick in. This is a sign that the technology-enabled productivity boom that began in 1996 hasn't ended.