IT ISN’T EASY to know where you are going when you don’t even know where you have been. That’s the problem facing economists as they try to guess where the U.S. economy is headed. A month ago the government reported that the growth in productivity in the fourth quarter had plummeted to the puny rate of 0.8 percent. But last week the government revised the puny 0.8 percent to a more robust 2.1 percent. That means that unit labor costs, originally estimated to be rising at the inflation-threatening rate of 2.3 percent, had really risen at the less scary rate of 1.3 percent.
These new figures, along with the announcement that average hourly wages have risen only moderately, gave Federal Reserve Board Chairman Alan Greenspan support for his program of “measured” increases in interest rates, and forced his more hawkish critics to the sidelines.
