Dean Baker has been worrying
for a while
about US
productivity. Could it be that he needn’t
have worried?
U.S. productivity up sharply in 4th quarter
The productivity of U.S. workers rose sharply in the fourth quarter and labor
cost growth slowed, but future revisions may temper what at first blush is
good news for the inflation-wary Federal Reserve.
Nonfarm business productivity, a gauge of how much a worker produces per hour,
mounted at a 3 percent annual pace in the final three months of 2006, the
Labor Department said on Wednesday.
Wall Street had expected a 1.8% rise in Q4 productivity, not a 3% rise –
so you can see why David
Altig (who has lots of pretty charts) says that the report "makes it
easy to feel good".
On the other hand, it’s not that hard to feel bad if you try hard enough: Q3
productivity was revised down to -0.1%, which is frankly dreadful.
Here’s one of Altig’s charts. It seems that overall, 2006 (the yellow bars)
was pretty much in line with 2005 (the blue bars), while the final quarter of
2006 (the pink bars) was very strong indeed. So I’m not worrying too much.
Felix,
The graphs are missing an important part of the story. This data does not include the 900,000 jobs that were added into the establishment data with the February jobs report. These jobs will be first be included in the revised 4th quarter productivity data. The effect will be know about 0.6 percent off the productivity growth rate from the first quarter of 05 to the first quarter of 06.
we will be looking at very different numbers then.