- THE MAGAZINE
Federal Reserve Chairman Alan Greenspan said in congressional testimony that Tuesday's rise was a "fairly significant increase." Productivity, without a major increase in employment, is "still moving at a really quite remarkable pace," he said.
"At some point these very dramatic gains are going to slow down to a more sustainable long-term pace, at which point there will be a fairly marked pickup in employment," Greenspan told the Senate Banking Committee.
Production of automobiles and parts, home electronics and computers and office equipment increased in June. Declines were reported in appliances, furniture and carpeting.
Industrial production in May was revised slightly higher to 0.4 percent instead of the 0.3 percent advance the Fed estimated a month ago. At factories alone, the sector also posted a sixth straight increase, rising 0.7 percent in June. Output at mines expanded 1.1 percent, and production by utilities increased 1.6 percent.
The behavior of consumers, whose spending accounts for two-thirds of the country's economic activity, and of businesses, whose deep cuts in capital investment helped push the economy into recession, will shape the recovery.
Citing worries about the strength of the rebound, the Federal Reserve has opted at each of its four meetings this year to leave short-term interest rates at 40-year lows. Growing numbers of economists believe the Fed might leave rates unchanged for the rest of the year. Policy-makers said they hope low rates will encourage consumers to spend and businesses to invest, which would help the economy to rebound.