Feb 2, 2024 2 min read

Happy Groundhog Day!

Punxsutawney Phil, the famous groundhog, woke up this morning and did not see his shadow, calling for an early spring. In the 1979 comedy movie classic, "Being There," Chauncey Gardner, played by Peter Sellers, predicted: "Yes! There will be growth in the spring!"

There has been growth in the winter too. Yesterday, the Atlanta Fed's GDPNow model estimate for Q1's growth was raised from 3.0% to 4.2% (saar). Also yesterday, we learned that productivity growth was gangbusters during Q4-2023 following similarly strong numbers for Q2 and Q3 last year (chart). On a y/y basis productivity was up 2.7%.

Unit labor cost (ULC) inflation was only 2.3% y/y during Q4 because the productivity gain of 2.7% offset some of the 5.0% increase in labor compensation. ULC inflation is the main determinant of the CPI inflation rate (chart).

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