Productivity down 4.2%, largest decline in nearly 40 years

[Omaha Steve]

Source: AP

By MARTIN CRUTSINGER

WASHINGTON (AP) — U.S. productivity fell at an annual rate of 4.2% in the fourth quarter, the largest quarterly decline in nearly four decades.

The revised figure released by the Labor Department Thursday was slightly smaller than the 4.7% decline estimated a month ago. But it was still the biggest drop since the second quarter of 1981, when productivity fell at a rate of 5.1%.

Labor costs rose at a 6% rate in the fourth quarter, slightly lower than the 6.8% first estimated.

Productivity is the amount of output per hour of work. The revisions reflected the fact that the government made changes to its estimate gross domestic product, the country’s total output of goods and services, to show an increase of 4.1% at an annual rate in the fourth quarter, slightly higher than its initial estimate of 4% growth.



FILE - In this June 11, 2020 file photo, workers on scaffolding lay blocks on one of the larger buildings at a development site where various residential units and commercial sites are under construction in Cranberry Township, Butler County, Pa. U.S. productivity increased at a solid 4.6% pace in the July-September quarter, slightly below the initial estimate, while labor costs fell at a slower pace. The Labor Department reported that the third quarter increase in productivity was below the first estimate a month ago of a 4.9% increase. (AP Photo/Keith Srakocic, File)


Read more: https://apnews.com/article/business-us-news-b0d30b24b1b526d734742eac8ad6ba37

[gab13by13]

1. But but but,

we don't need no stinking Rescue package. (sarcasm)

[LSparkle]

2. Not in my world ... I'm working MORE from home

I used to spend 8-9 hours a day in the office but working remotely in online almost 12 hours a day.

My coworkers all agree that if we were to go back to driving to the office (we’re based in Los Angeles), we’d be less productive!!

[uncle ray]

5. But are you actually more productive?

When I was wfh, I found myself working more hours to accomplish the same amount of work, due to the challenges of wfh.

[LSparkle]

12. Frankly, yes

I’m single, not dealing with kids learning remotely or other distractions ... It just feels like workload has increased during wfh. It’s like everyone is determined to show they can do more away from the office and at this pace I don’t think I could keep up if I added back 2 hours in the car each day.

[WHITT]

3. And

we got chicken-littles running around screaming about inflation. From WHAT?

[bucolic_frolic]

4. From less output using more resources

which is exactly what a drop in productivity means. Worse they're spending more on labor to produce that output, meaning costs are higher, and that will lead to price increases - inflation.

[PSPS]

7. With the discount window at zero, there is no threat of inflation at all.

[WHITT]

8. No

You don't get inflation when you're in an economic hole, other than an external event like the oil shock during the Carter administration. Unemployment claims just turned back around and went UP again.

[bucolic_frolic]

9. Yes, you get stagflation - inflation and a slowing economy at the same time

Economists struggled in the 1970s to explain sstagflation. Some thought it a wage-price spiral, others focused on productivity. I know because I took a course from a former Economic Adviser to a head of state. Declines in productivity produce less output per man hour, by definition. That means the price of goods must rise to pay workers the same amount, or wages must be cut or employment curtailed to produce a similar drop in costs. And since output falls further, the situation only gets worse.

[TexasBushwhacker]

6. You know what? GOOD!

Productivity has been going up, up, up for decades, while lower and middle class wages have stagnated. You want more productivity? FUCKING PAY FOR IT!

[tonekat]

10. Ain't that the truth?

I mean, who wouldn't want to knock themselves out for 1970's wages in 2021??

[Aristus]

11. You know what increases productivity?

A LIVING WAGE!

[roamer65]

13. As far as inflation, watch the velocity of money figures.

If they start to spike, then inflation is on it way.

If not, we are still in an economic hole. The figure is horrible right now and this the reason Treasury Secretary Yellen is saying, “GO BIG.”

https://fred.stlouisfed.org/series/M2V