Jobless Add to Productivity with Less Inflation

The 6.8 million Americans out of work for 27 weeks or longer -- a record 46% of all U.S.’ unemployed -- are providing the nation's companies with an eager, skilled, and cheap labor pool. This is allowing businesses to retool their workforces, boosting efficiency and profits; following the deepest recession since the 1930s. Fired workers from Wall Street to South Carolina, where 58% of the unemployed have been without work for six months or longer, say they are networking, going back to school, and retraining to stay relevant as jobs become more specialized. Some still may not achieve comparable positions, according to Federal analysts’ predictions.

Even as manufacturing continues to rebound and job creation resumes, the average duration of unemployment reported in May was a record 34.4 weeks, twice the rate of the 1981-82 Recession - when joblessness reached 10.8%. U.S. productivity gains averaged 2.9% from 2000 through the first quarter of 2010, compared with 2.1% in the period 1990-1999, and 1.5% in 1980-1989, according to Labor Department figures. The increased efficiency has helped improve earnings, with more than 80% of companies in the S&P 500 Index reporting profits that exceeded analysts’ estimates during the most recent quarter.

The Fed's preferred price gauge, which excludes food and fuel, rose 1.3% in May from a year earlier. Experts’ project inflation will average 1.1% by this measure in 2010 and 0.8% in 2011. We will keep you posted…

30 Day Libor	10-Year Treasury	Prime
0.35%	2.94%	3.25%

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