Notes 2 Flashcards
Unit labor cost
w x l
Y
Compensation =
labor cost per output + output per hour
3.7 = 1.5% + 2.2%
Productivity in Quarter 2
Productivity rose 2.2%
as output growth - 2.4%
exceeded hours worked growth - 0.2%
It is becoming __________ to get additional output from current workers
more difficult
With aggregate demand still rising, firms will have to ___________ hiring in 2012
increase
Hourly compensation
Real Hourly compensation
Hourly compensation - rose 3.7%
real hourly compensation - rose 1.7%
*inflation 2.0%
Growth in ______________ remain weak, giving firms incentive to hire
unit labor costs
Labor?
Labor is relatively inexpensive, leading to higher profits
Since labor is relatively inexpensive
Allows for additional capital for expansion plans to offset tighter credit conditions
wages =
wages = Lcost/unit + output per hour
2nd quarter 2012 wages
2.17% = 0.93% + 1.24%
Increase productivity —–>
increase profits
Price rising ——–> increase profits
Single family housing starts =
535,000
5.5% m/m
29% y/y
Single family permits =
512,000
0.2% m/m
25% y/y
Upward momentum is building for ______________
residential construction
Residential construction should add _______________
0.33% to 2012 GDP growth
Residential Construction Factors:
Large inventory of foreclosed homes
homebuilders are more confident home sales on an upward trajectory
low level “dearth”, new home inventory
rising jobs, income, and confidence
Proxy for new housing demand
“measure”
Growth in construction < Growth in households
S (savings) =
= Sprivate + Spublic
= Y (output) - C (consumers) - G (government)
= Investment
Value of total savings must equal ___________________
value of total investment
In U.S., we have an extremely ______ savings rate
low
Slonable funds
Households willingness to save
Government surplus
Dlonable funds
Profitable investment opportunities