MORE ECONOMIC WEIRDNESS….This is weird. There are two measures of employment ? the Household Survey and the Payroll Survey ? and they have been oddly divergent for the past few years. No one really seems to know why they don’t track each other very closely anymore.
Now, via Nathan Newman, I see that the Economist is proposing yet another divergence, this time in statistics that measure economic growth. In the past, GDP (for goods only, not services) tracked pretty closely with another measure called Industrial Production. But the two diverged in 2001 and have diverged even further since then. If you use GDP numbers (again, for goods only), the economy grew 8% in the fourth quarter of 2003. If you use the IP number, economic growth was only about 2%.
Until now, the usual explanation for GDP growing so fast while job growth has been sluggish is that we’ve seen an explosive growth in productivity. If workers are hugely more productive than in the past, then the economy can grow even if the number of workers stays the same (or drops).
My gut feeling, based solely on following this issue at a layman’s level, is that I’ve never quite bought into this supposedly stratospheric increase in productivity. Jan Hatzius, the economist who has pointed out this latest divergence in economic statistics, seems to agree, and suggests that the headline GDP number is overstated for technical reasons having to do with how we count imports. Bottom line: he thinks jobs have been slow to pick up because the economy isn’t actually recovering as strongly as official figures suggest.
I imagine some of the blogospheric economists will chime in on this at some point. Until then, it’s just a point to ponder.