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9 August 2017
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| Productivity (The Total Investment & Insurance Solutions) |
The productivity of American workers rose just modestly in the spring,
extending a worrisome issue that has persisted throughout this expansion. The Total Investment & Insurance
Solutions
Productivity grew at an annual rate of 0.9
percent in the April-June quarter, slightly better than a scant 0.1 percent
rate of increase in the first quarter, the Labor Department reported Wednesday.
Labor costs edged up at a 0.6 percent rate in the second quarter, a sharp
slowdown from a 5.4 percent growth rate in the first quarter. The Total Investment & Insurance
Solutions
Productivity, the amount of output per hour
of work, has been weak throughout the economic recovery, now in its ninth year.
Many analysts say the issue is the biggest economic challenge facing the
country.
For 2016 overall, productivity actually
declined — the first fall in 34 years. Productivity last year had previously
been reported as a slight increase of 0.2 percent. However, that gain
evaporated as part of the government's annual benchmark data revisions. It
marked the first annual decline in productivity since a 1 percent drop in 1982. The Total Investment & Insurance
Solutions
The small improvement in the second quarter
reflected the fact that overall economic growth, as measured by the gross
domestic product, accelerated to a 2.6 percent rate of increase compared to a
1.2 percent gain in the first quarter. The
Total Investment & Insurance Solutions
Since 2007, annual productivity increases
have averaged just 1.2 percent. That's less than half the average annual gains
of 2.6 percent logged in 2000 to 2007, when the country was benefiting from
increased efficiency from computers and the internet in 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 challenge of boosting productivity back
to the levels before the Great Recession of 2007-2009 will be a key factor in
determining whether President Donald Trump will achieve his goal of boosting
overall growth. The economy's potential for growth is a combination of labor
force expansion and growth in productivity. The Total Investment & Insurance Solutions
During the campaign, Trump pledged to double
growth to 4 percent or better. But since taking office, his administration has
projected a slightly lower but still ambitious goal of pushing annual growth
back up to 3 percent. Trump's first budget projects that faster economic growth
will produce $2 trillion in deficit reduction over the next decade, a forecast
most private economists view as overly optimistic.The Total Investment & Insurance Solutions
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