Merrill: Productivity Figures Big In 2006 U.S. Growth

If the economists at Merrill Lynch & Co. are correct, inflation-adjusted GDP growth for the U.S. will slow to 2.7% in 2006 from 3.5% this year. And if those same economists are correct, much of next year's GDP growth will come from relatively high productivity.

"Productivity is expected to account for three-quarters of next year's growth rate, keeping a firm lid on unit labor costs," says Merrill. At the same time, the New York-based financial firm sees the overall U.S. unemployment rate, now 5.0%, rising toward 5.5%, which, it says, "will likely keep wage trends relatively subdued."

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