World
Robots and happy workers: Productivity surge helps explain US economy's surprising resilience
WASHINGTON (AP) — Trying to keep up with customer demand, Batesville Tool & Die began seeking 70 people to hire last year. It wasn’t easy. Attracting factory workers to a community of 7,300 in the Indiana countryside was a tough sell, especially having to compete with big-name manufacturers nearby like Honda and Cummins Engine.
Job seekers were scarce.
“You could count on one hand how many people in the town were unemployed,” said Jody Fledderman, the CEO. “It was just crazy.’’
Batesville Tool & Die managed to fill just 40 of its vacancies.
Enter the robots. The company invested in machines that could mimic human workers and in vision systems, which helped its robots “see” what they were doing.
The Batesville experience and others like it have been replicated countlessly across the United States for the past couple of years. Chronic worker shortages have led many companies to invest in machines to do some of the work they can’t find people to do. They’ve also been training the workers they do have to use advanced technology so they can produce more with less.
The result has been an unexpected productivity boom, which helps explain a great economic mystery: How has the world’s largest economy managed to remain so healthy, with brisk growth and low unemployment, despite brutally high interest rates that are intended to tame inflation but that typically cause a recession?
A Halter robot collects a finished piece for blood pressure pumps from a Mazak Integrex at Reata Engineering and Machine Works Thursday, Feb. 15, 2024, in Englewood, Colo. (AP Photo/David Zalubowski)
To economists, strong productivity growth provides an almost magical elixir. When companies roll out more efficient machines or technology, their workers can become more productive: They increase their output per hour. A result is that companies can often boost their profits and raise their employees’ pay without having to jack up prices. Inflation can remain in check.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, has likened surging productivity to “magic beanstalk beans for the economy. … You can have faster income increases, faster wage growth, faster GDP without generating inflation.’’
Joe Brusuelas, chief economist at the tax and consulting firm RSM, said, “The last time we saw anything like this was the late 1990s.”
That was when a productivity surge — an early payoff from the sudden embrace of laptops, cellphones and the internet — helped allow the Federal Reserve to keep borrowing rates low because inflation remained under control even as the economy and the job market sizzled.
A worker at Reata Engineering and Machine Works programs a Mazak Variaxis machine used to make semiconductor pieces, Thursday, Feb. 15, 2024, in Englewood, Colo. (AP Photo/David Zalubowski)
This time, the Fed’s aggressive streak of rate hikes — 11 of them starting in March 2022 — has managed to help cool inflation from a four-decade high of 9.1% to 3.1% while causing little economic hardship.
“I would have said it’s not possible,’’ said Sal Guatieri, senior economist at BMO Capital Markets. “But that’s exactly what happened.’’
A year ago, nearly every economist was warning that a recession was all but inevitable. Fed Chair Jerome Powell himself warned in 2022 that beating inflation would inflict “some pain” in the form of widespread layoffs and higher unemployment.
By last month, Powell was sounding a different note. With unemployment barely above a half-century low, the Fed chair told reporters, “We’ve had a very strong labor market, and we’ve had inflation coming down.”
He did caution that the central bank wants to see further progress in slowing inflation. Yet the Fed is so optimistic that inflation is heading toward its 2% goal that it hasn’t raised rates since July and is expected to cut rates multiple times this year.
A box of parts for blood plasma pumps sits ready for shipping from Reata Engineering and Machine Works Thursday, Feb. 15, 2024, in Englewood, Colo. (AP Photo/David Zalubowski)
Perhaps the likeliest explanation is the greater efficiencies that companies like Batesville Tool & Die have managed to achieve in the past year or so. Before productivity began its resurgent growth last year, a rule of thumb was that average hourly pay could rise no more than 3.5% annually for inflation to stay within the Fed’s 2% target. That would mean that today’s roughly 4% average annual pay growth would have to shrink. Yet higher productivity has changed that equation: There’s now more leeway for wage growth to stay elevated without igniting inflation.
“A lot of that pressure on business finances — that normally causes them to raise prices — has been offset by strong productivity growth,’’ Guatieri said.
At a news conference this month, Powell was asked whether he believed higher productivity helps explain why the economy has kept growing steadily even while inflation has tumbled.
“That’s one way to look at it — yeah,” Powell replied.
The productivity boom marks a sharp shift from the pre-pandemic years, when annual productivity growth averaged around a tepid 1.5%, according RSM’s calculations. Everything changed as the economy rocketed out of the 2020 pandemic recession with unexpected vigor, and businesses struggled to re-hire the many workers they had shed.
The resulting worker shortage sent wages surging. Inflation jumped, too, as factories and ports buckled under the strain of rising consumer orders. Parts shortages arose.
Desperate, many companies turned to automation. Investment in equipment and in research and development and other forms of intellectual property accelerated. The efficiency payoff began to arrive almost a year ago. Labor productivity rose at a 3.6% annual pace from last April through June, 4.9% from July through September and 3.2% from October through December.
At Reata Engineering & Machine Works, “efficiency was kind of forced on us,’’ CEO Grady Cope said. With the job market roaring, the company, based in Englewood, Colorado, couldn’t hire fast enough. Meantime, its customers were starting to balk at paying higher prices.
Semiconductor pieces sit in a shipping box as they are produced in a Mazak Variaxis machine at Reata Engineering and Machine Works Thursday, Feb. 15, 2024, in Englewood, Colo. (AP Photo/David Zalubowski)
So Reata installed robots and other technology to produce more with less. Software allowed it to automate the delivery of price quotes to customers. That process used to require two weeks. Now, it can be done in 24 hours.
Many economists and business people say they’re hopeful, if not certain, that the productivity boom can continue. Artificial intelligence, they note, is only beginning to penetrate factory floors, warehouses, stores and offices.
“Right now, AI is not a critical enabler for us; it’s an assistant and accelerator in certain roles,’’ said Peter Doyle, CEO of Hirsh Precision, which makes parts for the aerospace and medical device industries. “The world is still trying to understand what AI is capable of doing and how quickly it will advance.’’
The early evidence suggests that AI could sustain the productivity gains. A study last year by Erik Brynjolfsson of Stanford University and Danielle Li and Lindsey Raymond of the Massachusetts Institute of Technology tracked 5,200 customer-support agents at a Fortune 500 company who used a generative AI-based assistant in 2020 and 2021. The AI tool provided suggestions for dealing with customers and links to useful internal documents.
Those using the chatbot were found to be 14% more productive than colleagues who didn’t use the tool. They handled more calls and completed them faster. The biggest gains in productivity — 34% — came from the least-experienced, least-skilled workers.
Automation tends to raise fears that machines will replace human workers and thereby kill jobs. Some workers supplanted by robots do often struggle to find new work and end up settling for lower pay.
Yet history suggests that in the long run, technological improvements actually create more jobs than they destroy. People are needed to build, upgrade, repair and operate sophisticated machines. Some displaced workers are trained to shift into such jobs. And that transition is likely to be eased this time by the retirement of the vast baby boom generation, which is causing labor shortages.
Some of today’s productivity gains may be coming not just from advanced technology but also from more satisfied workers. The tight labor markets of the past three years allowed Americans to change jobs and find others that pay better and make them happier and more productive.
One of them was Justin Thompson, of Kalamazoo, Michigan, who had felt burned out by his job as a police officer, with its 16-hour workdays .
“I was literally running myself into the ground,’’ he said.
Thompson’s wife saw a job posting for operations manager at a charter airline. Even without airline experience, his wife felt he could use skills he gains as a Marine Corps infantryman — handling logistics for missions — during tours in Iraq and Afghanistan.
She was right. Omni Air International hired him in 2019.
Thompson, 43, said he he loves the new job, which allows him to work from home when he’s not traveling. And his Marine experience — which included developing ways to improve efficiency — has proved invaluable. Technology helps, too: Thompson travels with a laptop, iPad and mobile printer and uses proprietary software to manage logistics.
Other workers have switched from low-skill jobs to those that pay better and are more productive.
“The people who were rolling tacos on Dec. 31, 2019 … yeah, they’ve moved up,’’ RSM’s Brusuelas said. “They’re doing other things and making a lot more money.”
At Reata Engineering, staffers were trained to use new sophisticated equipment. One 19-year-old employee, a university engineering student, has used AI tools to make company training materials less cumbersome and time-consuming.
“The whole point is not to lay people off,’’ said Cope, the CEO of Reata Engineering. “The point is to make people do jobs that are more interesting’’ — and pay better, too.
BALTIMORE (AP) — Blake Horvath to Eli Heidenreich.
That’s the connection that led Navy to such a memorable season — and the two of them came through again on the biggest play of the biggest game.
Horvath threw an 8-yard touchdown pass to Heidenreich with 6:32 remaining — on fourth-and-goal — and No. 22 Navy rallied to beat Army 17-16 on Saturday. Heidenreich, the career and single-season leader in yards receiving for the Midshipmen, caught six of Horvath’s seven completions on the day.
“Who wouldn’t go to him?” Horvath said. “Talk about an all-time Navy legend. You’re going to be talking about Eli Heidenreich for years and years and years.”
Although it was clearly a passing situation, and Heidenreich was Navy’s top target, he was single covered over the middle.
“Tried to bring some pressure on them,” Army coach Jeff Monken said. “Good throw and good catch.”
With President Donald Trump in attendance, Navy (10-2) got its second straight victory over Army (6-6), and the Midshipmen won the Commander-In-Chief’s Trophy for a second straight season. The Black Knights have not beaten a Navy team that was ranked by the AP since 1955.
Horvath was fortunate to have the chance to throw that decisive touchdown pass. On second-and-goal from the 1, he lost the ball while attempting a tush push. Army linebacker Eric Ford had a chance to scoop it up, but Navy running back Alex Tecza lunged over to prevent that, and Heidenreich eventually fell on the ball back at the 8.
“That’s probably the last thing you want to see on the 1-yard line is you turn around and the ball is just bouncing behind you,” Heidenreich said. “I was blocking down. I thought he had pushed in, and kind of out of my peripheral I saw it going behind me.”
On the next play, Horvath was nearly sacked, but he was able to throw the ball toward Tecza as he went down. The ball fell incomplete instead of being caught around the 15, which was just as well for Navy because it made going for it on fourth down a more viable option.
“I kind of felt like we had to,” Navy coach Brian Newberry said. “The nature of what they do offensively, despite how well we played in the second half, you may not get the ball back.”
Even after Heidenreich’s touchdown and an Army punt, Navy still had to escape one more near-turnover. On third-and-3 from the Army 43, the ball popped loose on a run by Horvath, but he was able to catch it out of the air. It came loose again and the Black Knights recovered, but after a review, Horvath was ruled down before the second fumble — a yard short of the line to gain.
Tecza then ran for the first down that enabled Navy to kneel out the clock, and Horvath appeared to wave goodbye at the Army sideline. There was a bit of a ruckus near midfield after the final kneel-down before things eventually calmed down for the traditional singing of the alma maters.
“They want to talk all their crap during the game and act like they’re so tough,” Horvath said. “The excuse last year was that they played a conference championship game before us. This year, we’ll see what it is.”
The Black Knights were trying to turn the tables on Navy after a ranked Army team — which had just won the American Conference title — lost to the Midshipmen last year.
The teams traded touchdown drives to start the game, each lasting 13 plays, 75 yards and over seven minutes. Horvath had a 5-yard scoring run, and Army quarterback Cale Hellums answered with a 2-yarder. Army’s first drive didn’t end until 5 seconds into the second quarter.
Then it was a while before anyone reached the end zone again. With Army up 10-7 late in the second quarter, the ball slipped out of Horvath’s hand while he was looking to pass. Army recovered the fumble at its own 45 with 20 seconds to play and moved into range for a 45-yard field goal by Dawson Jones.
Navy’s defense stiffened in the second half, but the Midshipmen still flirted with disaster. Horvath threw an interception in the third quarter that was initially returned to the end zone — before a replay showed Army’s Justin Weaver had a knee down when he picked off the pass at the Navy 32. The Black Knights had to settle for three — Dawson connected on a career-long 48-yard kick.
Navy’s Wing-T offense has been explosive this season. The Midshipmen entered the day with an FBS-high 10 plays of at least 60 yards. Army mostly kept them contained, but Horvath slipped free for a 37-yard run that set up a third-quarter field goal that made it 16-10.
After Hellums’ underthrown pass was intercepted by Phillip Hamilton, giving Navy the ball at the 50 with 11:19 to play, Tecza’s 24-yard run made it first-and-goal from the 5.
Trump tossed the coin before the game at midfield, then returned at halftime to walk from the Navy sideline to the Army one.
One that got away
Army defensive lineman Jack Bousum, who is from Annapolis, had a big game against his hometown team. He finished with 1 1/2 sacks and a fumble recovery.
The takeaway
Army: The Black Knights were the better team in the first half Saturday but didn’t do much offensively after that.
“They beat blocks,” Monken said. “We didn’t sustain the blocks we needed to.”
Navy: Horvath made some big plays and some bad ones, and the Navy defense was stout in the second half. The Midshipmen finished tied for first in the AAC this year but missed out on the league title game because of tiebreakers. This victory matters more to them anyway.
Up next
Army: Faces UConn in the Fenway Bowl on Dec. 27.
Navy: Faces Cincinnati in the Liberty Bowl on Jan. 2.
___
This story has been corrected to show Army took over at the Navy 32 after Horvath’s interception.
___
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World
2 US Army soldiers, interpreter killed in Syria ambush attack, Trump warns of ‘very serious retaliation’
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President Donald Trump warned Saturday that there will be “very serious retaliation” after a lone Islamic State gunman in Syria killed two U.S. Army soldiers and a U.S. interpreter in an ambush attack.
Chief Pentagon spokesperson Sean Parnell announced earlier that the soldiers and interpreter were targeted in the central Syrian town of Palmyra in an attack that left three others wounded. U.S. Central Command said the deaths and injuries were a “result of an ambush by a lone ISIS gunman in Syria.”
“We mourn the loss of three Great American Patriots in Syria, two soldiers, and one Civilian Interpreter. Likewise, we pray for the three injured soldiers who, it has just been confirmed, are doing well. This was an ISIS attack against the U.S., and Syria, in a very dangerous part of Syria, that is not fully controlled by them,” Trump wrote on Truth Social.
“The President of Syria, Ahmed al-Sharaa, is extremely angry and disturbed by this attack. There will be very serious retaliation,” he added.
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U.S. forces patrol in Syria’s northeastern city of Qamishli in the Hasakeh province, on Jan. 9, 2025. (Delil Souleiman/AFP via Getty Images)
In comments to reporters outside of the White House on Saturday, Trump also said, “This was an ISIS attack on us and Syria. And again, we mourn the loss and we pray for them and their parents and their loved ones.”
Parnell wrote on X that the attack happened as the soldiers “were conducting a key leader engagement.”
“Their mission was in support of ongoing counter-ISIS/counter-terrorism operations in the region,” he added, noting that “The soldiers’ names, as well as identifying information about their units, are being withheld until 24 hours after the next of kin notification. “
Secretary of War Pete Hegseth said that, “The savage who perpetrated this attack was killed by partner forces.”
“Let it be known, if you target Americans — anywhere in the world — you will spend the rest of your brief, anxious life knowing the United States will hunt you, find you, and ruthlessly kill you,” Hegseth also said in a post on X.
Parnell said the attack is currently under investigation. A Pentagon official told Fox News Digital that the attack unfolded in a place where the Syrian President Ahmed al-Sharaa does not have control.
President Donald Trump meets with Syrian President Ahmed al-Sharaa at the White House on Nov. 10, 2025. A Pentagon official told Fox News Digital that the attack on the soldiers on Saturday, Dec. 13, 2025, unfolded in a place where the Syrian President Ahmed al-Sharaa does not have control. (Syrian Presidency/Anadolu via Getty Images)
“I’m praying for the brave U.S. soldiers and civilian who lost their lives, those who were injured in this attack, and the families who bear this profound loss,” Army Secretary Daniel Driscoll wrote on X. “The men and women who serve our country represent the very best of our nation. We mourn the passing of these heroes and honor their service and sacrifice.”
A senior U.S. official earlier confirmed to Fox News there were multiple injuries after American service members were ambushed in Syria.
“The United States, CIA and military forces are reportedly deeply involved in securing and stabilizing the situation in Syria,” Dan Diker, president of the Jerusalem Center for Security and Foreign Affairs, recently told Fox News Digital.
The injured in Saturday’s attack were taken by helicopters to the al-Tanf garrison, which is near the border with Iraq and Jordan, The Associated Press reported, citing Syrian state media.
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U.S. Army soldiers prepare to go out on patrol from a remote combat outpost on May 25, 2021, in northeastern Syria. (John Moore/Getty Images)
There are currently around 900 U.S. troops in Syria.
The U.S. had eight bases in Syria to keep an eye on ISIS since the U.S. military went in to prevent the terrorist group from setting up a caliphate in 2014, although three of those bases have since been closed down or turned over to the Syrian Democratic Forces.
On Monday, tens of thousands of Syrians flooded the streets of Damascus to mark the first anniversary of the Assad regime’s collapse.
U.S. Army soldiers stand near an armored military vehicle on the outskirts of Rumaylan in Syria’s northeastern Hasakeh province, bordering Turkey, on March 27, 2023. (Delil Souleiman/AFP via Getty Images)
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Those celebrations came a year after former Syrian dictator Bashar al-Assad fled the capital as rebel forces swept through the country in a lightning offensive that ended five decades of Assad family rule and opened a new chapter in Syrian history.
Fox News’ Lucas Tomlinson, Ashley Oliver, Jennifer Griffin, Benjamin Weinthal and Ashley Carnahan contributed to this report.
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The European Commission has dismissed as “speculative” and groundless a lawsuit launched by the Russian Central Bank against Euroclear, the Brussels-based central securities depository that holds €185 billion in immobilised assets.
In a short statement published on Friday morning, the Russian Central Bank announced the start of legal proceedings for the “recovery of damages” and blamed Euroclear for preventing the release of the assets, which are subject to EU law.
The lawsuit was submitted to the Arbitration Court in Moscow.
The development comes with the EU still hammering out a plan to channel Russia’s sovereign assets into a zero-interest reparations loan to Ukraine, a process with Euroclear at its centre. EU leaders are meant to make a final decision when they meet on 18 December.
“Our proposal is legally robust and fully in line with EU and international law. The assets are not seized, and the principle of sovereign immunity is respected,” Valdis Dombrovskis, the European Commissioner for the Economy, said on Friday afternoon.
“We kind of expect that Russia will continue to launch speculative legal proceedings to prevent the EU from upholding international law and to pursue the legal obligation for Russia to compensate Ukraine for the damages it has caused.”
According to Dombrovskis, all European institutions that have Russian assets, from Euroclear to private banks, will be “fully protected” against Moscow’s retaliation. The EU has controlled €210 billion in assets of the Russian Central Bank since February 2022.
The sanctions regime already allows Euroclear to “offset” any potential loss, he added.
For example, if a Russian court orders the seizure of the €17 billion that Euroclear has on Russian soil, Euroclear will be allowed offset the loss by tapping into the €30 billion that its Russian counterpart, the National Settlement Depository, has stored within the EU.
Additionally, the reparations loan, if approved, will introduce a new mechanism to deal with state-to-state disputes. If Russia seizes the sovereign assets of Belgium in retaliation, Belgium will be allowed to “offset” the lossagainst the €210 billion, while Russia will not recover the amount it has seized when the assets are freed.
The Belgian factor
The legal safeguards are meant to allay the concerns of Belgium, which remains the chief opponent of the reparations loan. Belgian Prime Minister Bart De Wever has repeatedly warned of the risk a successful legal challenge could pose.
“We put forward a proposal. We are confident in its legality and its court-proof character,” a Commission spokesperson said.
Euroclear, which declined to comment, has previously criticised the reparations loan as “very fragile”, legally risky and overtly experimental.
The lawsuit comes a day after EU countries agreed to trigger an emergency clause to immobilise the Russian Central Bank assets for the foreseeable future.
Under the new law, the €210 billion will be released only when Russia’s actions “have objectively ceased to pose substantial risks” for the European economy and Moscow has paid reparations to Kyiv “without economic and financial consequences” for the bloc – a high bar that is unlikely to be cleared any time soon, if ever.
The indefinite immobilisation is meant to further placate Belgium and Euroclear in order to facilitate the approval of the reparations loan next week.
In a separate statement, the Russian Central Bank said it “reserves the right, without further notice, to apply all available remedies and protections if the proposed initiatives of the European Union are upheld or implemented”.
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