On Monday the government revised their Q1 Productivity number to unchanged, from down 0.6%, and revised the labor costs down to 2.5% from 3.0%.
As labor costs go up, we will either see inflation pressure (the price we pay on goods will go up) or a slow-down in production or possibly both. Stay tuned as to how the summer consumer spending goes…
Everyone is waiting on the Fed Reserve meeting to see whether they will raise the prime rate. It seems they have enough news to justify raising the prime rate to avoid inflation, but they have been staying on the cautious side, not wanting to derail a recovery in the economy.
The consensus is that they will not raise the Fed funds rate.