In projecting U.S. GDP growth at about a 2% rate for the remainder of this year and in 2011, I have noted that the two propellants of growth so far in this economic recovery -- the inventory revival and fiscal stimuli -- are largely exhausted.
But are there other sectors of the economy that might serve as the backbone of any meaningful economic recovery? I don't see any, especially with U.S. consumers continuing their saving spree, repaying debts and remaining hesitant to spend like they did during the boom times of earlier years.
An excellent interpretative report by Bloomberg News Friday summarized the two-edged sword nature of continued U.S. productivity growth, and it's one investors should review.
Here's the low-down:
U.S. worker productivity, which increased 1.3% in the third quarter, is creating even-more-lean U.S. corporations. Productivity has also risen at an impressive 3.4% annualized rate over the past five quarters.
Financial crisis or not, fragile economic recovery or not, there has been one constant in the past and current economic cycles: productivity.
Worker productivity rose an impressive 2.8% in the first quarter, the U.S. Labor Department announced Thursday. That's down slightly from the previously-released 3.6% rate for the first quarter, but still constitutes a 4.0% productivity gain on a year-over-year basis. Productivity rose at an annual rate of 7.8% and 6.3% in the third and fourth quarters of 2009, respectively. In 2009, productivity rose 3.7%.
Thursday morning, the Labor Department released a couple of tidbits of news. One of these news nuggets was that productivity grew at a better-than-expected rate in the first quarter of 2010, as productivity grew at an annual rate of 3.6%. This rate of growth was stronger than the 2.5% growth the consensus expected.
While this is good news, because it indicates that corporate profits were good, there is also some bad news. The data indicates that household incomes continue to be "squeezed," which could indicate that the burgeoning economic recovery will hit some rough water.
True, placing the words Congress and productivity next to one another can seem like a contradiction in terms.
Well, scholar Norman Ornstein of the American Enterprise Institute think tank, and as good as it gets regarding the workings of Congress and the public policy process, has an idea that just may make Congress more productive: a five-day work week.
Lost amid the shuffle of recent economic data points this week was one enduring trend in the U.S. economy -- and it's one that has an upside and, unfortunately a downside (at least short-term): productivity.
Worker productivity continues to increase at an astounding rate: it increased an enormous 8.1% in Q3, the U.S. Labor Department announced. What's more, productivity is up about 4% in the past 12 months. The same report indicated that unit labor costs fell 2.5% in Q3 and declined 2.9% in the past year.
Work smarter not harder. Do more with less. Increase your output. Become more productive.
You've heard all this before, right? What it all means is that layoffs are coming, and the survivors are going to have to take on a hell of a lot more work, with no increase in support, resources or compensation. As cuts come, the survivors fight to survive, and succeeding means that a new benchmark is set. If you can survive without the help you used to have, it's easier to defer hiring for a while.
There are times when I have been behind the times but not like the investment gurus that laughed at Peter Schiff over the past few years as he called it like he saw it, and he happened to be spot on with his facts and his conclusions. For those that follow the blabbing of Arthur Laffer -- he in particular never looked more laughable than he does in this compilation video of his business show appearances, that has been floating around the web for a while.
Former Federal Reserve chair and current presidential adviser Paul Volcker says that the global economy may be deteriorating even more precipitously than it did during the Great Depression.
"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," he said at a Columbia University luncheon. He also dismissed the notion that the financial innovation of the past decade has had any positive results: "There is little correlation between sophistication of a banking system and productivity growth."
These days, most investors, executives, and economists know that there's no shortage of unpleasant news regarding the U.S. economy.
Moreover, some days it's hard to find those bright spots that we know exist amid the the snow storm of the recession. Here's one: U.S. worker productivity.
Underscoring that while there are no positives to job layoffs -- each job loss is a tragedy -- citizens and investors can at least point to the fact that the U.S. workforce is becoming more productive, and corporate efficiency is improving.
Inflation -- the bane of earnings -- must always be watched, lest it rob the nation of return on investment.
Further, while the inflation hawks have been out in force, given the U.S.'s likely, record fiscal stimulus package and the Federal Reserve's doubling of its balance sheet, so far inflation remains tame.
Unit labor costs -- a key gauge of inflation, and one the Fed watches closely -- rose at a 1.8% annualized rate in Q4 2008, the U.S. Labor Department announced Thursday. Meanwhile, productivity in Q4 2008 rose at a 3.2% annualized rate.
Productivity measures output per hour worked. Economists say rising productivity usually leads to increases in income, as businesses can increase salaries/wages paid without increasing their per unit costs.
U.S. worker productivity increased a revised 2.2% in Q2, below the consensus estimate, as companies eliminated jobs without hurting output, the U.S. Labor Department announced Friday.
Economists surveyed by Bloomberg News had expected productivity to increase 2.7% in Q2. Productivity increased 2.6% in Q1. In the past 12 months, productivity is up 2.8%.
Productivity measures output per hour worked. Economists say rising productivity usually leads to increases in income, as businesses can increase salaries/wages paid without increasing their per unit costs.
Meanwhile, unit Q2 unit labor costs, a statistic adjusted for increases in efficiency, increased 1.3%. However, in the last 12 months labor costs have increased just 1.5%. Labor costs increased 2.2% and 4.7% in Q1 and in Q4 2007, respectively.
Economist Peter Dawson said the adequate Q2 2.2% productivity statistic, although below consensus, will provide argument support for doves on the U.S. Federal Reserve who want to keep interest rates as low as possible to encourage a U.S. economic recovery.
"Productivity is still rising at a healthy pace. That fact, combined will the relatively modest unit labor costs for the second quarter and year, present a picture that inflation is not getting out of control, which is good news for those seeking lower interest rates, and for business executives," Dawson said. "If these productivity and cost trends continue, hawks on the Fed are going to have a hard time making a case for an interest rate increase at the Fed's next meeting."
Just call it stagflation, updated for the globalization era.
Oil's record, 5-year rise, combined with increasing food costs, have increased inflation, reduced disposable income, and slowed the U.S. economy to a crawl, when combined with the effects of the end of the housing boom.
The above sounds like a prescription for a replay of the 1970s' stagflation era, but is it? Not quite, according to Stephen Cecchetti, professor of economics at the Brandeis University International Business School.
Cecchetti told Bloomberg News Thursday a more-flexible economy, with lower stockpiles of goods, increased fuel efficiency, increased worker productivity, and lower wage increases for employees are among the economic differences separating the 1970s and 2008 U.S. economies. As a result, Cecchetti doesn't see a repeat of the 1970s' high inflation/high unemployment levels.
Economist David H. Wang concurred with the above conclusion, but argued that the two major factors in the nation's enhanced ability to cope with large increases in commodity costs and other negative economic factors are energy efficiency and worker productivity.
U.S. worker productivity increased a revised 2.6% in Q1 2008, above the consensus estimate, as companies eliminated jobs without hurting output, the U.S. Labor Department announced Wednesday.
Economists surveyed by Bloomberg News had expected productivity to increase 2.5% in Q1 2008. Productivity increased 1.8% in Q4 2007.
Productivity measures output per hour worked. Economists say rising productivity usually leads to increases in income, as businesses can increase salaries/wages paid without increasing their per unit costs.
Meanwhile, unit Q1 2008 labor costs, a statistic adjusted for increases in efficiency, increased 2.2%. Labor costs increased 4.7% in Q4 2007.
During Q1 2008, hours worked fell at a 1.8% annualized pace.
Economic Analysis: A strong productivity report. The nation's workforce continues to become more efficient, which is a good sign given increasing business costs in other areas -- raw materials, commodities, energy, and transportation costs, etc. As in 2007, for the first quarter of 2008, companies did a good job increasing productivity while containing employee costs amid sluggish business conditions.
The dollar rallied to a six-week high Wednesday after U.S. productivity increased at a larger-than-expected rate and sentiment surfaced that Europe's economy may have slowed considerably.
The dollar rose about 2 cents versus the euro -- a large move in the currency market -- to $1.5370 on Wednesday afternoon. The dollar also gained against the world's other major currencies, rising about 2 cents to $1.9530 versus the British pound? about 0.5 cents to $1.0555 versus the Swiss franc and about one-half yen to 104.85 yen versus Japan's yen. U.S. productivity gives dollar a lift
Independent currency trader Andrew Resnick told BloggingStocks Wednesday the Q1 2008 productivity data, combined with a sense that the European Central Bank is behind-the-curve concerning interest rate cuts to deal with slowing economic growth, put traders in dollar-buy mode.
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In projecting U.S. GDP growth at about a 2% rate for the remainder of this year and in 2011, I have noted that the two propellants of growth so far in this economic recovery -- the inventory revival and fiscal stimuli -- are largely exhausted. 
An excellent interpretative report 
Financial crisis or not, fragile economic recovery or not, there has been one constant in the past and current economic cycles: productivity. 
Thursday morning, the Labor Department released a couple of tidbits of news. One of these news nuggets was that productivity grew at a better-than-expected rate in the first quarter of 2010, as 
True, placing the words Congress and productivity next to one another can seem like a contradiction in terms. 
Work smarter not harder. Do more with less. Increase your output. Become more productive. 
Former Federal Reserve chair and current presidential adviser Paul Volcker says that the global economy may be 
These days, most investors, executives, and economists know that there's no shortage of unpleasant news regarding the U.S. economy. 
Inflation -- the bane of earnings -- must always be watched, lest it rob the nation of return on investment. 
Just call it stagflation, updated for the globalization era.
The dollar rallied to a six-week high Wednesday after U.S. productivity increased at a larger-than-expected rate and sentiment surfaced that Europe's economy may have slowed considerably. 
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