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5 June 2017
 |
American workers (The Total Investment & Insurance
Solutions)
The productivity of American workers was flat in the first three months
of this year, while labor costs rose at the fastest pace since the second
quarter of last year.
Productivity growth was zero in the January-March quarter after rising
at a 1.8 percent annual rate in the fourth quarter, the Labor Department
reported Monday. It was the weakest performance since productivity had fallen
at a 0.1 percent rate in the second quarter of last year but an improvement
from an initial reading of a 0.6 percent decline. The Total Investment & Insurance Solutions
Productivity, the amount of output per hour of work, has been weak
through most of the current recovery. Many analysts believe finding a way to
boost productivity growth is the biggest economic challenge facing the country,
but there is no consensus on the cause of the slowdown.
Labor costs rose at a 2.2 percent rate after having fallen at a 4.6
percent rate in the fourth quarter. It was the fastest gain since April-June of
last year. The Total Investment &
Insurance Solutions
The revision in first quarter productivity had been expected because of
the revision to first quarter gross domestic product, the economy's total
output of goods and services. The government initially reported that GDP had
risen by a tepid 0.7 percent rate in the January-March perio. But that was
revised to show a slightly better reading of a 1.2 percent gain. The boost in
output led to the better reading for productivity.
Since 2007, productivity increases have averaged just 1.2 percent.
That's less than half the 2.6 percent average annual gains turned in from 2000
to 2007, when the country was benefiting from increased efficiency from greater
integration of computers and the internet into the workplace.
Rising productivity means increased output for each hour of work, which
allows employers to boost wages without triggering higher inflation. The Total Investment & Insurance
Solutions
The effort to boost productivity back to the levels since before the
Great Recession will likely be a key factor in determining whether President
Donald Trump will achieve his goal of boosting overall growth from the weak 2.1
percent average seen since the recession. The economy's potential for growth is
a combination of increases in the labor force and growth in productivity.
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