Worker productivity falls in second quarter - Trade Only Today

Worker productivity falls in second quarter

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The productivity of U.S. workers fell in the second quarter, showing that companies could find it harder to keep cutting costs as the recovery unfolds.

The U.S. economy lost momentum heading into the second year of the recovery, prompting companies to hold the line on employment and pay. Flagging growth and a slow jobs recovery have fueled investor expectations that Federal Reserve policymakers will announce efforts to spur the economy after meeting today, Bloomberg reports.

"Companies are not feeling confident enough to hire," Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Fla., told Bloomberg. The productivity and labor cost figures leave the Fed "still considering what else they can do to help the economy along."

Fed chairman Ben Bernanke last month said the outlook for growth was "unusually uncertain" and signaled that signs of deeper economic weakness would be needed to justify more stimulus.

On Aug. 2 Bernanke said rising wages probably will spur household spending in the next few quarters.

The policymakers' decision is scheduled to be released about 2:15 p.m.

Economic growth has slowed since the first quarter, with the economy expanding at a 2.4 percent annual rate from April through June after gains of 3.7 percent in the first three months of the year and 5 percent at the end of 2009.

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