Goldilocks On Steroids

The latest economic reports contain positive surprises on four fronts: employment, inflation, trade and productivity,.

The economy created 263,000 new jobs last month, far more than the 190,000 expected, and the unemployment rate sank to 3.6%, the lowest level since December 1969. 

Inflation came in much lower than expected, even though the job market tightened and wages rose. 

Conventional wisdom holds that inflation should rise when wages rise, but the opposite happened..

Another surprise came with the announcement that a U.S. trade agreement with China will be concluded within days, averting a trade war with the world’s No. 2 economy.

But the new productivity data was the most positive and important surprise..

In the quarter that ended March 31st, productivity surged at an annualized rate of 3.6%! 

The productivity rate for the past five years annually averaged 1.3% but in in the last couple of years it’s soared.   

At 3.6%, growth in productivity of American workers is double the 1.8% expected by the nonpartisan Congressional Budget Office.

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