Worker Shortages Drive Unexpected Productivity Boost, Keeping Inflation in Check

Productivity has increased unexpectedly in the US due to worker shortages leading companies to invest in automation and technology. This has allowed them to produce more with less.

Companies like Batesville Tool & Die have struggled to hire enough workers, so they've invested in machines and systems to improve efficiency.

Economists say the productivity boost has helped keep inflation under control even with strong economic and job growth.

Fed Chair Jerome Powell acknowledges productivity may explain why the economy kept growing while inflation fell. This contrasts with his earlier warnings.

Some experts think the productivity increase, like that seen in the late 1990s with new technologies, could allow the Fed to cut interest rates this year.