U.S. Labor Productivity Falls at The Fastest Rate in 74 Years

U.S. Labor Productivity Falls at The Fastest Rate in 74 Years

The number of new applications for unemployment benefits in the United States increased by 19,000 over the past week to a total of 200,000. The market expected slightly lower numbers, but according to experts, there is no reason to perceive the current development negatively.

Best numbers in decades

The total number of Americans receiving unemployment benefits fell to 1.38 million in the past week. That’s the lowest since January 1970. As of the last March of this year, around 11.5 million new jobs had been created, which is also one of the best figures in decades.

Labour productivity has fallen

According to experts, the situation on the US labor market is such that it contributes to the rise in inflation. Labor costs increased year-on-year in March at the fastest rate in 30 years. Another significant factor that will contribute to even higher inflation is the dramatic decline in labor productivity. This decreased by 7.5 percent year-on-year in the first quarter. Labour productivity has not fallen so steeply for the last 74 years.

The Federal Reserve responded to the imbalance between the labor market and price developments on Wednesday by raising interest rates in order to contain inflation and return it to its two percent target as soon as possible.


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