Productivity increases at the quickest rate in two years, according to the Bureau of Labor Statistics.

In the third quarter, U.S. labor productivity surged by 4.9%, the highest growth in two years, indicating enhanced efficiency in businesses that may help alleviate wage pressures and manage inflation toward the Federal Reserve's 2% target. Fed Chair Jerome Powell noted that AI investments are likely contributing to this productivity boost, with projected GDP growth rising from 1.8% to 2.3%. However, concerns remain about potential productivity undermining factors such as trade and immigration policies. Despite this, declining unit labor costs are positive for inflation forecasts.