Productivity Gains in 2Q Due Mainly to Cost Cuts

Associated Press (9/2, Crutsinger) – Companies managed to boost their workers' productivity and their own profits in the spring mainly by slashing costs and capping their employees' pay. That was clear from revised government figures released Wednesday that provided further evidence that a tentative economic recovery has begun, while also reinforcing nagging concerns. Analysts worry the tight job market and lack of wage growth will depress incomes, limit further corporate profitability and forestall a pickup in all-important consumer spending. Economists say they don't expect productivity to keep surging. But they said the productivity jump in the second quarter, combined with falling labor costs, might persuade employers to slow their pace of layoffs and eventually resume hiring.