Page A6
August 9, 2000
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Business
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AiiumxtiiJiRtss
Americans’ productivity surged ahead over the past 12 months at the fastest
pace in 17 years while labor costs declined, the first time they have dropped
since 1984, the Labor Department reported Tuesday.
Both numbers w ere much better than expected, and the Clinton administration
responded by hail ing the remarkable combination o f positive forces exhibited
by a “new economy” bolstered by strong business investment in computers
and other productivity-enhancing equipment.
“We are enjoying a splendid combination o f strong productivity growth, low
unemployment and modest inflation,” said Labor Secretary Alexis Herman.
“Productivity growth is the key to our economic prosperity.”
Private economists said the good productivity figures made it highly unlikely
that the Federal Reserve will boost interest rates for a seventh time when the
central bank meets again Aug. 22.
Productivity, the amount o f output
Productivity
per hour o f work, increased at an annual
Here is a look at non-farm
rate o f 5.3 percent in the April-June
business productivity, percent
quarter, more than double the first
change from previous quarter
SeatorMv adiusioa
quarter's 1.9 percent gain.
8%
—
Unit labor costs, the salary paid per
amount o f work, dipped by 0.1 percent
at an annual rate in the second quarter
after rising by 1.9 percent in the first
quarter.
Even more significantly, the changes
in both productivity and unit labor
costs over the past 12 months, which
sm o o th es out th e q u a rte rly
fluctuations, were at the best levels in
nearly a generation.
O v er the y e a r en d in g in June,
III IV
I II
productivity for nonfarm businesses
2000
rose by 5.1 percent, the best 12-month
AP
Source Departm ent ot Labor
showing since a 5.3 percent rise in the
12 months ending in the third quarter o f 1983.
Meanwhile, unit labor costs over the past year fell by 0.4 percent, the first
annual drop in this key measurement o f wage pressures since 1984.
The productivity improvement was led by a surge in manufacturing productivity,
which climbed at an annual rate o f 5.1 percent in the second quarter after even
bigger gains o f 7.9 percent in the first quarter and 10.2 percent in the fourth
quarter o f last year.
Stan Shipley, a Merrill Lynch economist, called this performance “awesome”
and said it showed that despite the lowest unemployment rates in three
decades, wage pressures are being well contained by advances in productivity.
“You just don’t get inflation out o f that mix,” he said.
President Clinton used the news to plug Vice President A1 G ore’s bid for the
White House and to disagree with Republican tax break proposals in Congress.
“This continuing productivity growth underscores the importance o f
maintaining the fiscal discipline that has been so crucial to this investment-led
economic expansion,” Clinton said during a trip to Boise, Idaho, to tour
wildfires.
Rising productivity is considered the crucial element to boosting living
standards because it lets employers pay workers higher salaries, financed by
the increased output. W ithout productivity gains, employers must cover
higher wage costs by raising product prices, which boosts inflation.
After more than two decades o f lackluster gains in productivity from 1973 to
1995 averaging 1.4 percent per year, the increases since 1996 have averaged
almost double that.
These gains in productivity allowed the Federal Reserve to watch as the
unemployment rate fell to levels not seen in three decades without becoming
overly concerned about inflation.
Still, there is a debate among economists about how much o f the recent
productivity gains are permanent and how much have been influenced by
temporary factors.
Federal Reserve Chairman Alan Greenspan told Congress in July that question
will be decided by what happens in coming months.
Mark Vitner, an economist at First Union in Charlotte, N.C., said much o f the
second quarter’s productivity gain was probably temporary as output soared
faster than businesses could find new workers in the tight labor markets.
He predicted productivity gains would slacken o ff in the second half o f this
year, causing unit labor costs to rise. Those developments, he said, would
force the Fed to resume raising interest rates in early 2001.
Data: minorities have more mortgages
A ssqciauil E ress
A higher percentage o f Blacks,
Hispanics and American Indians were
approved for home mortgages last
year than in 1998, new government
data show. Although they were still
turned down more often than whites,
regardless o f income, their loan denial
rates declined from a year earlier.
Low- and moderate- income borrowers
also made gains, according to the
latest annual survey o f 7,833 banks,
savings and loans, credit unions and
mortgage companies. But a group
that lobbies forgreateravailability o f
c re d it in p o o r n e ig h b o rh o o d s
suggested that some o f the increase
in mortgage lending to minorities may
have come from loans with unfairly
high interest rates and fees.
“We must know more about the nature
o f th is le n d in g sp ik e to the
underserved,” said John Taylor,
president and chief executive officer
o f the N a tio n a l C o m m u n ity
Reinvestment Coalition.
The data released Tuesday by the
F e d e ra l F in a n c ia l In stitu tio n s
Examination Council do not include
interest rates or other loan terms. The
council is comprised o f the bank
regulatory agencies, including the
Federal Reserve and the Federal
Deposit Insurance Corp.
In a statement, Taylor noted that so-
called predatory lending has been on
the rise in p o o r and m in o rity
neighborhoods. There has been
increasing public criticism in recent
months o f the practice, in which some
lenders seek out low-income, minority
and elderly borrowers and charge
them what are considered excessive
interest rates and fees. Nonetheless,
T aylor said, “W e are pleasantly
surprised by the 1999 figures.”
They showed that the numberofhome
mortgage loans, both conventional
and those backed by government
g u arantees, issued last year to
A m erican Indians jum ped 44.4
percent from 1998. For Hispanics, it
rose 18.3 percent; forblacks, it was up
11.1 percent; for Asian Americans, it
increased 16.3 percent. For whites.
Blacks, Hispanics and American
Indians, however, continued to be
rejected formortgage loans more often
than whites, though theirdenial rates
declined from 1998, the survey
showed.
Charlie Sifford from page
African-American to win a PGA Tour
event at the Hartford Open in 1967.
Again in 1969, he won the Los Angeles
Open. Then in 1980,thesam eyearhe
joined the Senior PGA Tour, he won
the Suntree Senior PGA TourClassic.
Sifford has done a lot in the golf
community that has made things
better. “I never dreamed when 1 started
out that the discrimination in golf
could reach as deeply as it does, nor
did I think that my struggle would be
a lifelong occupation,” said Sifford in
his recent autobiography “Just let me
play.”
Leiberman from page 1
showed B ush’s lead cut to 2 points from 19 over the
weekend.
A CNN pollster said it was much too soon to know how
closely that change reflected longer-term reality. Gore
cam paign spokesm an Chris Lehane acknow ledged,
“T here’s so much elasticity in these polls, but the fact that
it bounced this way can only be interepreted as an affirmation
and a positive response.”
In Austin, Texas, Bush released a statement that referred
to Lieberman’s record supporting missile defense, tuition
vouchers for private schools and privatization o f Social
Security reforms — positions more in line with Bush than
Gore.
Tipping his hat to Lieberman’s “convictions” and strong
faith, Bush continued:
“ I hope he will run a positive campaign and that the vice
president will use this opportunity to change his tone to
that o f Senator Lieberm an's level.”
But it was Lieberman, not Gore, who went after Bush on the
Nashville stage in a speech that was twice as long as Gore’s.
“Our opponents have done all they can to blur the
differences. Yesterday, they even responded to news that
A1 Gore picked me by saying that George Bush and I think
alike," Lieberman said, adding one ofG ore’s favorite zingers:
1
“With all due respect, I think that’s like saying that the
veterinarian and the taxidermist are in the same business
because either way, you get your dog back.”
Local police estimated that a total o f 8,000 people packed
the plaza and steps o f the adjacent state Capitol for the
rally, which opened with pop singer Jewel strumming a
guitar and singing, “Who will save your soul from the lies
that you told, boy?”
Mrs. Lieberman, who immigrated from Czechoslovakia as
a little girl, marveled that they stood in a place honoring
the World War II soldiers who liberated her mother from
the Auschwitz and Dachau concentration camps.
Speaking to fellow immigrants, Mrs. Lieberman said: “I
am standing here for you. This country is our country....
Anything is possible for us.”
Said her husband, “There are some people who might
actually call A l’s selection o f me an act o f chutzpah."
In Chicago, the Rev. Jesse Jackson called it a bold and
moral choioe.
"Let the nation rejoice. The tent is getting bigger and
better," Jackson said at a news conference at his Rainbow/
PUSH Coalition headquarters. “Another barrier falls and
another opportunity arises. A political risk, a moral
certainty.”
1
Two reasons I quit smoking.
You can do it too.
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