Friday’s report could also help economists and policy makers make some progress in understanding the productivity puzzle -- for example, insofar as it sheds more light on the compositional changes in job creation, particularly between the tradeable sector and the less productive/remunerated non-tradeable sector. But it is unlikely to resolve the puzzle in any decisive manner.
For that, we need a much better understanding of the structural changes to growth, labor demand and price determination. As a result, central banks will continue to face competing signals and need to worry about the risk of a hard landing, which bond markets understand but stock markets seem to have discounted to a very large extent.
Mohamed A. El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE and chairman of the President’s Global Development Council, and he was chief executive and co-chief investment officer of Pimco.
This column was provided by Bloomberg News.