| | | | |  | | By Victoria Guida | |  President Joe Biden and then-Rep. Karen Bass (D-Calif.) speak with workers at the Metro D Line Extension Transit Project in Los Angeles. | Apu Gomes/Getty Images | PRODUCTIVITY POINTS — Prices have gone up a lot over the past couple of years, which, unless you’re living under a rock, you’ve noticed. Wages, too, have surged and are now growing faster than inflation. But the Federal Reserve has kept a wary eye on worker income for fear that it might lead to a resurgence in inflation. If you read that paragraph, you might think, despairingly: do we really have to worry about wages growing too fast? The good news is that the answer is no, not necessarily. But the economy does need a special ingredient: productivity growth. That is, more output from the same inputs. “The absolutely most critical piece of information that we need to glean is, what is happening to the productivity growth rate?” Chicago Fed President Austan Goolsbee told Nightly recently. “The question of, ‘Is this rate of wage inflation consistent with this rate of price inflation?’ That cannot be answered unless you say what the productivity growth rate is.” A reductive but useful way of thinking about wage growth is productivity growth plus inflation. So if you have 4 percent wage growth and 1 percent productivity growth, that implies 3 percent inflation — above the Fed’s 2 percent target. But if productivity growth is higher, you can have higher wages without rapid price increases. And there is more good news. Maybe. The most recent data for the second quarter (April to June) showed productivity grew at an annualized rate of 3.7 percent. That’s gangbusters compared to the rate we saw before the pandemic, which was more like 1 percent. Before we pop the champagne, though, there are caveats. Productivity is output per hours worked. On an individual level, you might have the same productivity on a given day if you’re getting a little bit done each hour or achieving a ton for just a couple hours. On a macroeconomic scale, we measure how much is produced by everyone combined in the aggregate amount of time they’re working. As you might guess, that’s a massive undertaking. Initial data is quite noisy, and it gets significantly revised as more, better data becomes available. But even if 3.7 percent gets revised down, or if it’s just a one-off, there’s reason to be optimistic that productivity growth might be a little higher going forward. “We should hope that the recent second-quarter productivity number is the real deal,” said James Pethokoukis, a senior fellow at the conservative American Enterprise Institute. “If the U.S. economy is going to grow anywhere near as fast in the future as it has in the past, productivity growth is going to have to do the heavy lifting.” Productivity last had a sustained surge because of the proliferation of the internet, though it can sometimes spike for bad reasons as well; often it goes up during a recession when there are layoffs because companies are able to sustain the same level of output for a time with fewer people. This happened in 2020. Then in 2022, productivity actually dropped because companies were adding workers so fast, so more hours were being worked but less was being produced. But now, those workers are largely trained up and supply chains have largely healed, opening the floodgates for more production, notes Skanda Amarnath, executive director of the worker advocacy group Employ America. “Output gains tied to the recovery that preceded it are starting to shine through,” he said. Now that the weirdness of the pandemic seems to have been more ironed out in the data, Goolsbee thinks that the second half of the year will be more instructive as to whether we’re returning to our disappointing pre-pandemic trend or whether we’ll see a boost. The biggest thing everyone is watching? If and when artificial intelligence will begin to show up in the productivity data. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at vguida@politico.com on Twitter at @vtg2.
| | | | DOWNLOAD THE POLITICO APP: Stay in the know with the POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. The sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don’t miss out on the app you can rely on for the news you need. DOWNLOAD FOR iOS – DOWNLOAD FOR ANDROID. | | | | | | | | | — Trump’s bond set at $200,000 in Georgia election-related case: Donald Trump’s attorneys have signed an order setting his bond on racketeering charges in Georgia at $200,000 and binding Trump to a set of rules that explicitly limit his ability to use social media to attack witnesses or co-defendants in the case. The three-page order, signed by Georgia Superior Court Judge Scott McAfee, sets the conditions of Trump’s pretrial release in the case, which stems from his effort to subvert the 2020 election. — Tropical Storm Hilary shutters Southern California schools: District leaders fearing safety hazards from Tropical Storm Hilary moved to close schools across much of Southern California today. The nation’s second largest school district, Los Angeles Unified, announced Sunday it would close to allow staff time to check buildings for damage from the rare West Coast tropical storm — and to avoid potentially dangerous bus rides to school. San Diego Unified pushed the start of its school year to Tuesday, but asked staff to report to work if they could do so safely. Several other school districts in Los Angeles County, including in Pasadena, also announced plans to close, bracing for the storm to swirl northeast and risk flooding throughout the region. — AI cannot hold copyright, federal judge rules: Artificial intelligence cannot hold a copyright for works it creates, a federal judge ruled. Judge Beryl A. Howell of the U.S. District Court for the District of Columbia found that the U.S. Copyright Office was correct in denying copyright protections to a work that was created entirely without human involvement. The ruling will be a critical component in future legal fights as lawyers and inventors test the limits of intellectual property laws when applied to AI.
| | SECOND IMPRESSIONS — Vice President Kamala Harris’ term has largely been marked by stilted performances at public events, at odds with the uninhibited interrogator she was known as in the Senate. They’ve fueled whispers about whether she’ll be a drag on the reelection ticket as the 2024 race heats up, writes POLITICO. Now her political future, and quite possibly the success of the Democratic ticket in 2024, hinges on a simple question: Is it possible for Harris to make a second impression? For Harris, it’s a question that fundamentally misunderstands the point. In her mind, she’s the same person she was when the prevailing narrative of her was that of a star prosecutor, ascendant political talent and even the future of the Democratic Party. UNREQUITED BROADSIDES — Chris Christie built his entire presidential candidacy toward a marquee confrontation with Donald Trump, relentlessly goading him and needling him as a coward in a clear effort to tempt the quick-to-anger former president into showing up to the debate on Wednesday in Milwaukee. It appears Trump will not take the bait, other than swiping back at the former New Jersey governor on social media and in speeches, writes the New York Times. Last week, he signaled that he planned to skip the first Republican debate and instead sit for an interview with Tucker Carlson that will be broadcast online at the same time. Trump’s absence could lead to an anticlimactic scene at the debate, with Christie forced to launch unrequited broadsides through the airwaves without the fireworks of a Trump response. TRUMP’S TRIAL DATE — Federal prosecutors objected today to the April 2026 trial date proposed by lawyers for Donald Trump in the case accusing the former president of scheming to overturn the results of the 2020 election, reports the Associated Press. Members of special counsel Jack Smith’s team said in a court filing that Trump’s lawyers last week had exaggerated the amount of material that they would need to sift through in order to be ready for trial. In suggesting an April 2026 trial date, defense lawyers said they had been provided by prosecutors with 11.5 million pages of potential evidence to review. But prosecutors said much of that includes duplicate pages or information that is already public, such as documents from the House committee that investigated the Jan. 6 riot at the U.S. Capitol as well as copies of Trump’s social media posts.
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Presidential candidate Luisa González, of the Citizen's Revolution Political Movement, speaks to supporters after the polls closed in Quito, Ecuador. | Carlos Noriega/AP Photo | IT’S A RUNOFF — Ecuadorian voters looking for a new leader to help curb the country’s unprecedented violence will have to head to the polls again in October for a runoff, reports the Associated Press’ Regina Garcia Cano. The October battle will pit Luisa González, an ally of Ecuador’s former president Rafael Correa (who was convicted of corruption in 2020 in absentia, though remains influential in the country), against former lawmaker Daniel Noboa, the son of banana magnate Alvaro Noboa. The younger Noboa was the big surprise of the election, winning 24 percent despite never polling higher than fifth. González, meanwhile, was the frontrunner throughout but only captured 33 percent, well short of the 50 percent she needed to win outright. In third place with 16 percent was Christian Zurita, whose name was not on the ballot but who replaced Fernando Villavicencio, whose killing this month as he left a campaign rally in Quito, the capital, laid bare people’s fears over unprecedented violence in a country they considered peaceful up until three years ago. MOVED IT ALL ONLINE — China wants to define how the metaverse works — and it is pushing proposals that bear an eerie resemblance to the country’s controversial social credit systems, proposals reviewed by POLITICO showed, according to Gian Volpicelli. The proposals, drafted by the state-owned telecoms operator China Mobile, floated a “Digital Identity System” for all users of online virtual worlds, or metaverses. They recommended that the digital ID should work with “natural characteristics” and “social characteristics” that include a range of personal data points like people’s occupation, “identifiable signs” and other attributes. They also suggested this information be “permanently” stored and shared with law enforcement “to keep the order and safety of the virtual world.” The proposals even provide the example of a noxious user called Tom — an ideal stand-in for whoever uses the fledgling technology, for instance for gaming or socializing — who “spreads rumors and makes chaos in the metaverse”; the digital identity system would allow the police to promptly identify and punish him. The proposals are part of discussions between tech experts and officials at the International Telecommunication Union (ITU), the United Nations’ telecoms agency that sets global rules for how technology works. Chinese public and private actors have sought to set global standards on fledgling technologies at the ITU — a strategy that Western officials have previously warned about as China seeks to promote a government-controlled version of the internet and telecommunications. Western officials already rang the alarm in 2020 over similar attempts by Chinese telecoms giant Huawei to rewrite how internet protocols, a key building block of global internet traffic, work.
| | | | Enter the “room where it happens”, where global power players shape policy and politics, with Power Play. POLITICO’s brand-new podcast will host conversations with the leaders and power players shaping the biggest ideas and driving the global conversations, moderated by award-winning journalist Anne McElvoy. Sign up today to be notified of the first episodes in September – click here. | | | | | | | | | | Over 8,500 The number of Mauritanian migrants who crossed the Mexico-U.S. border between March and June, a huge surge up from just 1,000 in the four months prior. The uptick is due to the discovery of a new route through Nicaragua, where relaxed entry requirements allow Mauritanians and some other foreign nationals to purchase a low-cost visa without proof of onward travel. The news of the new route of migration to the U.S. has spread largely through Instagram and TikTok. | | | | THE CULT OF LORNE — In today’s media landscape, rarely is there still one singular figure who can define a show or make or break a career. Maybe the last vestige of the true super-producer is Lorne Michaels, the scion of the SNL empire and its products, which include a constellation of stars like Eddie Murphy, Adam Sandler, Tina Fey, Aidy Bryant, Pete Davidson and so many others. What all of those people have in common is they’ve essentially pledged allegiance to Michaels and his brand, even long after leaving SNL. For Longreads, Seth Simons digs into the cult of Michaels, why he’s managed to stay singularly relevant for decades, and what could be next for him and his empire.
| | | |  On this date in 1940: Doctors and nurses watch over Leon Trotsky as he dies from head wounds suffered in an attack in Mexico City. The exiled Russian revolutionary and co-founder of the Soviet Union, was attacked with a pickax by Ramón Mercader and fatally wounded. While still conscious, Trotsky said that his death was ordered by Joseph Stalin; it was later confirmed Mercader was an agent of the Soviet Union. | AP Photo | Did someone forward this email to you? Sign up here. | | | | Follow us on Twitter | | | | Follow us | | | | |
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