With labor costs constituting three-fourths of costs, unless growth in compensation per hour is falling, which seems most unlikely from other information, it is difficult to avoid the conclusion that output per hour has to be rising at a pace significantly in excess of the officially published annual growth rate of nonfarm productivity of one percent over recent quarters.
In this respect, the conviction is growing within the central banking community that comprehensive monetary policy strategies that include a prominent role for money and credit considerations are better suited to “lean against the wind” in the sense that I have just indicated.