PRODUCTIVITY PERFORMANCE

While wage growth declined from 5.9%/year during 5/22 to 3.6%/year in 7/24, it’s since risen to 4%/year. While growth this high isn’t generally conducive to 2% inflation, a doubling of productivity growth to 2% makes it possible. The rise is the result of firms investing in machines as wages rose and employees were hard to find during Covid, as well as massive pandemic-induced job shuffling/switching that raised wages and productivity.