Re: BLS Daily Report

[Jim Devine <jdevine@xxxxxxxxxxxxxxx>]

> The durability of the recent productivity surge will help ensure that the
> U.S. economy stays on a steady path of solid expansion without threat of
> inflation heating up and ending the longest period of growth in the
> nation's history, a Federal Reserve official and leading business
> economists say during the first day of the National Association for
> Business Economics' annual meeting in Chicago.  In large part, the
> productivity gains of the last few years have been linked to the tight
> labor market, as businesses have resorted to greater capital investment to
> achieve efficiencies, the economists say.  If and when overall economic
> growth slows to the point where labor market tightness eases, productivity
> growth might ebb, some analysts suggest.

So the Fed is paying attention to the usually-ignored "Verdoorn's Law,"
which argues that demand-side stimulation encourages labor productivity
growth? If so, they should avoid hiking interest rates, so as to maintain
labor-market tightness and productivity growth.

Or are they heeding Marx's writings in Capital, volume I, ch. 25, in which
he argues that tight labor-power markets encourage labor-power-saving
technical change?

Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine