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November 12, 2009

Optimism about productivity, hiring

Former Washington Post monetary guru John Berry, writing for Reuters, is optimistic about the huge increase in labor productivity for the third quarter. Some think the fact that the country is making much more stuff with many fewer workers signals a jobless recovery and high unemployment for a long time. Maybe not, says Berry:

Yet the sharp gains in efficiency are helping drive corporate profits and that could be just what’s needed to convince employers that it’s safe to begin hiring again.

Furthermore, it isn’t just profits that are improving. Workers’ inflation-adjusted hourly compensation rose 2.1 percent over the past four quarters after falling by about the same amount in the preceding period.

Increased profitability is also paving the way for increased business investment, which will be an important determinant in how fast the economy grows next year. After falling for six consecutive quarters, business spending on equipment and software edged up at a 1.1 percent annual rate in the third quarter.

Posted by Jay Hancock at 1:41 PM | | Comments (0)

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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