Remind Us: Why Did The Fed Ease?

Productivity must be booming. Real GDP jumped 4.3% (saar) in Q3, following a 3.8% increase in Q2. Over the same period, aggregate hours worked in private industry was flat (saar). Productivity must have increased by more than 3.5% over the previous two quarters. That's consistent with our productivity-led Roaring 2020s scenario.

Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased 3.0% in Q3, compared with an increase of 2.9% in Q2. Consumer spending remained strong, rising 3.5%, up from 2.5% in the previous quarter. That's impressive considering that aggregate hours worked hasn't been growing.