Economic Productivity Is Looking Bleak

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


From the Financial Times:

Productivity is set to fall in the US for the first time in more than three decades, raising the prospect of persistent wage stagnation and the risk of a further populist backlash. Research by the Conference Board, a US think-tank, also shows the rate of productivity growth sliding behind the feeble rates in other advanced economies, with gross domestic product per hour projected to drop by 0.2 per cent this year.

The San Francisco Fed tracks a different measure called utilization-adjusted total factor productivity, which they say is a better benchmark of technological improvements than old-school labor productivity. Here’s their current series:

These are 4-quarter growth rates, but the San Francisco Fed says that utilization-adjusted TFP has already gone negative on a pure quarterly basis: it was -2.66 percent in the last quarter of 2015 and -0.58 percent in the first quarter of 2016. So everyone agrees: no matter how you measure it, productivity growth is pretty weak these days. Is this because technological change has stagnated? Because low wages have prevented businesses from spending money on new labor-saving machinery? Because we’re not measuring the effect of the app economy properly?

Hard to say. Come back in a decade and I’ll tell you. In the meantime, it’s something to keep an eye on.

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2020 demands.

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2020 demands.

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate