Friday, May 05, 2006
Growth of the number of people employed was slow, not just for April but with some downward revisions to the February and March numbers. But if you are going to say that output is slowing down in the second quarter you would need to consider the aggregate number of hours worked:
Since it is hours that interacts with capital and productivity to give us output, I wouldn't back off the GDP forecasts just yet.
The increase in wages that some are pointing to as a cause for thinking the FED will act more decisively against inflation were to be anticipated by that productivity report. I'm still in a 5.25% frame of mind.