go deep on this this was interesting this author says if productivity accelerates unit labor cost should remain stable and show should prices so as long as wages go up with increasing worker productivity we shouldn't actually see labor costs the top costs before the fork go up and what's really cool is you could just type into google st louis fred labor productivity and you'll get this first google result here labor productivity output per hour all employed individuals let's go to just the last five years here look at this inflection point after the pandemic so starting in uh well i mean i guess you could really say well it's qNUMBER_TOKEN all of this right here is really cute too uh in qNUMBER_TOKEN this inflection to the upside if we drew this trend line continued you know we did some technical analysis here we'd be shy of where we are now maybe we'd be somewhere right here at this gray or a marker or a reading of about NUMBER_TOKEN and we're actually at one one two five and we expect that pace of change that rate of change to accelerate in favor of more productivity as people start going back to work uh and continue to go back to work since people have already started go back to work if productivity accelerates uh the prices should remain stable here is another thing there are many reasons to believe firms will continue to invest and increase productivity one they're sitting on mounds of cash as a result of stimulus programs and cheap credit earnings growth has soared and labor is no longer such a cheap substitute for capital expenditure and firms have to catch up after weak investment in other words because labor is getting more expensive people are now companies are now purposefully plowing more money into new machinery and innovation to reduce input costs because labor's more expensive so in a weird way as labor gets more expensive the labor that we do hire becomes more productive because now it works with newly created or installed machinery because they that's the only way those jobs could be created in the first place by being more efficient uh and and i've previously talked about how this pandemic has been sort of this in my opinion cleanse for for corporations uh where corporations were able to lay off tens of thousands of people and then just hire back the people that they probably found were the most productive now that's harsh to the people who are not laid off or sorry who are not hired back but uh i'm talking in the mindset of an investor here not to offend so the shift from working uh at home during the pandemic may have also yielded efficiency gains uh NUMBER_TOKEN of uh respondents felt remote working has been good for productivity jury is still out on this though higher productivity growth though also means that the economy can maintain stable prices even in the face of higher wages this is this was money right here uh like when you now look at this and you you again you look at your inputs for inflation oh car prices went up airline prices went up wages are going up yeah but wait a minute airline car prices are temporary wedding dresses are temporary price increases sure the prices might stay at elevated levels for a while but if people are getting paid more and they're being more productive we could actually grow and inflict down inflation fascinating insights kathy fascinating insights financial times thank you so much for watching this video make sure to get your life insurance in as little as NUMBER_TOKEN minutes and folks we'll see in the next one thanks again bye
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