Michael Faulkender | 01-10-26

Larry Kudlow and Michael Faulkender discuss the economic significance of unit labor costs, which they define as the difference between worker compensation and productivity levels. They argue that when employees become more efficient through technological innovation and deregulation, businesses can afford to raise wages without passing those expenses on to consumers through higher prices. This trend serves as a proxy for low inflation, suggesting that the current economic environment could support lower interest rates from the Federal Reserve.