Fed Leader Doubts Productivity Stats

Federal Reserve Chairman Alan Greenspan, the nation’s inflation watchdog, said Wednesday he has doubts about the accuracy of government measures of worker productivity, a key to assessing inflation.

The speech at a dinner in his honor hosted by the Conference Board hardened a position that Greenspan has flirted with publicly for some time. He has hinted before that official measurement of productivity, which is the output per hour worked, has been too low and fails to take into account the increase in productivity that technology has allowed.

If productivity is actually higher than government statistics show, that would mean inflation is less likely to flare up. If employees produce more, a company has more leeway to raise their salary without adding to the cost of each item produced or the price it charges for those goods.

So if productivity is better than current figures indicate, there would be less pressure on the Fed to raise interest rates as a means to snuff out inflation.