Rising worker productivity is a good omen for the US economy that could help address the country’s recent bout of inflation, Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, said.
“That’s the little-known secret that no one talks about,” Schutte told Yahoo Finance Live. “In the U.S. economy, productivity is rising. That’s a really good thing because that increases the amount that we can pay our workers, makes the US economy grow faster, and keeps inflation at bay.”
A recent Goldman Sachs (GS) analysis found that the COVID-19 pandemic increased productivity by speeding up the digitization process within the workplace. The increase in employees working from home cut down on commuting times and raised worker productivity by 5%.
Wages have been on the rise recently, though inflation threatens to neutralize workers’ gains. Average hourly earnings rose 3.6% year over year in June and 5.7% in the leisure and hospitality sector. Meanwhile, the latest CPI numbers released earlier this week identified a higher-than-expected inflation rate of 5.4%.
