Productivity

PRODUCTIVITY….Via Dean Baker, I see that the Bureau of Labor Statistics has reported the latest quarterly productivity numbers. In Q3, nonfarm business productivity grew….

0%.

Now, this is not the first time productivity has leveled out for a quarter. A 16-year chart is here. But two things make this slowdown noteworthy. First, it follows weak Q2 productivity growth, which means we’ve had six straight months of poor performance. Second, remember my wonky post yesterday about possible mismeasurement of the increase in auto production? If that turns out to be a genuine error, it means this quarter’s productivity growth is overstated. We might have actually seen a drop in productivity.

I dunno. It looks to me like the housing market is collapsing, and that’s the bubble that’s been keeping the economy alive ever since the tech bubble burst. Is there another bubble to take over from housing? I sure don’t see one on the horizon. At the same time, middle-class incomes ? the engine of economic growth ? have fallen over the past few years, and there’s a limit to how much families can make up for that by piling on ever more debt. I suspect we’ve just about hit that limit ? and since the one constant of the financial industry is that it overreacts to both good news and bad, it’s likely that they’ll add to the economic misery by reining in credit even more than the fundamentals justify.

But at least they have a shiny new bankruptcy bill to help them through the hard times. I hope everyone who voted for that legislation is proud of themselves this time next year.

Washington Monthly - Donate today and your gift will be doubled!

Support Nonprofit Journalism

If you enjoyed this article, consider making a donation to help us produce more like it. The Washington Monthly was founded in 1969 to tell the stories of how government really works—and how to make it work better. Fifty years later, the need for incisive analysis and new, progressive policy ideas is clearer than ever. As a nonprofit, we rely on support from readers like you.

Yes, I’ll make a donation