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U.S. productivity, economy’s secret sauce, falls for first time in almost 3 years - MarketWatch

1. U.S. productivity declined 0.8% in Q1 2025, first drop since Q2 2022. 2. Unit-labor costs surged 5.7%, signaling wage pressures on companies. 3. Businesses may hesitate to invest due to productivity drop and tariff uncertainties. 4. DJIA rose 0.40% after the productivity announcement. 5. Economists warn of sluggish business investment affecting future growth.

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FAQ

Why Bearish?

The decline in productivity and rising labor costs may pressure profits, similar to past events like the 2008 financial crisis where decreased productivity led to economic downturns.

How important is it?

The decline in productivity and increase in unit labor costs could significantly impact corporate profitability, thus influencing DJIA directly.

Why Short Term?

Immediate concerns over productivity and investments may influence market reactions in the coming quarters.

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