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N.S. flood victim surprised by apartment makeover | SaltWireWASHINGTON - A recent surge in U.S. productivity has underscored Federal Reserve Chair Jerome Powell's emerging narrative for how inflation may continue to decline even amidst sustained job and economic growth.
New data released Wednesday showed productivity grew an outsized 4.7% in the third quarter, the largest increase in three years and the second large gain this year. That caused unit labor costs to fall at a 0.8% annualized rate. The dynamic is one reason why the Fed kept its policy interest rate on hold at 5.25%-5.50% at its meeting this week despite recent data showing the economy grew at a 4.9% annualized rate in the third quarter - far beyond the 1.8% rate Fed officials see as the underlying long-term, noninflationary trend.
Rising productivity"signals receding inflationary pressure even as the economy continues to display notable resilience," said EY Senior Economist Lydia Boussour."If companies can generate strong productivity growth, they will not be so inclined to pass elevated input costs onto consumers."
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