One little-discussed reason for the spate of improved corporate earnings is that production costs in the U.S. are trending downward. Though some businessmen still find themselves in a wage-price squeeze, the Commerce Department's new index of wage and salary costs per unit of manufacturing production has been moving down since the economy started climbing back last March (see chart). Labor costs usually fall during the early stages of a recovery because production then increases more rapidly than hiring does, but this year's drop has been abnormally large.
Belated Payoff. The dip in labor...
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