Productivity & Costs Q1 2010

Labor Productivity is still squeezing the middle class to death. Labor Productivity rose 3.6% in Q1 2010 after an astonishing 6.2% jump in Q4 2009. Output increased 4.4% and hours worked increased another pathetic 0.8%, annual rate. Hourly compensation increased 2.3%.

For the year labor productivity increased 6.1% and hours worked fell 3.0%.

This gain in productivity from the same quarter a year ago was the largest since output per hour increased 7.0 percent over the four-quarter period ending in the first quarter of 1962.

Think about bad trade deals, offshore outsourcing, insourcing (or bringing in cheap labor, undercutting U.S. workers wages and jobs). There is no way this is due to your iPhone or advances in technology, which is the common blow off response from economists.

Below is productivity, compounded against last quarter percent change:


Let's Chat Labor Productivity

One might notice the comment, Woe to the U.S. worker when productivity metrics are reported. Over and over again, I note that offshore outsourcing is the taboo word among mainstream economists, regardless of the numbers.

Well, it seems I am not alone in that assessment. A New York Times op-ed drives home the point:

There’s a problem: labor productivity figures, which are calculated by the Labor Department, count only worker hours in America, even though American-owned factories and labs have been steadily transplanted overseas, and foreign workers have contributed significantly to the final products counted in productivity measures.

Productivity, GDP, jobs and outsourcing

You see the headlines, you see the cheers. Don't you know the recession is over! Graphs, statistics, tables abound. People argue over margin of error, data points, and debate the great mystery of increased unemployment statistics, then quickly dismiss them as a lagging economic indicator.

But you, down on the ground with the rest of us, say hell no, all of my friends are broke, I can't find a job, I'm in debt, this talk of recovery is bullshit!

You might very well be right and the problem is current statistics appear not to be capturing the true state of GDP, Productivity and thus jobs (in the United States).

Industrial Production Plunged

Industrial production plunged in February as net imports continue to hammer US production

Two economic reports today give further evidence the economy is in a recession with precarious and dangerous conditions unlike any past experience. The Federal Reserve reported today that Industrial production plunged by -0.54% in February. This sharp decline comes after an even worse decline (-0.58%) in October left a quarterly decline from Q3 to Q4 of 2007. That is, overall Industry output in February is below levels reached last July. It is worse for the Manufacturing sector with an output decline in Q4 and a -0.24% decline in February, plunging production now back to levels lower than last June.


The Crisis in Household Finances

The crisis in household finances: total hours worked and real compensation per hour both declined in Q4 and yr/yr ...worse than previously reported.

The details of today’s revised BLS report on Q4 productivity and costs are again very instructive on the state of the economy.

According to the BLS, total non-farm output in 2007-Q4 grew by even less than the BLS had estimated last month; 0.27% annualized growth rather than their earlier estimate of 0.35%. It is important to note this small downward revision to the original estimate of virtual stagnant output because the headline (and virtually only media “reporting”) is that non-farm productivity growth was revised slightly upward from the initial 1.82% annualized rate to 1.85%.

Hours Worked Declined Sharply and Wages Fell

Today's BLS report: total hours worked DECLINED sharply in Q4 and AVERAGE real wage/benefit compensation per hour FELL.

After years of denial and spin about the financial condition of US households/consumers, you might think the newswires and salesmen on cable would be buzzing with the key findings in today’s BLS report on US hours worked, real compensation, output and productivity. You would be wrong; the debt industry’s misleading confidence game prevails with the key findings either not mentioned at all or they are relegated to an afterthought as space permits.

The key finding in today’s report is that the total number of hours worked (and paid) in non-farm businesses during 2007-Q4 FELL at an annual rate of -1.5%. Indeed, THE TOTAL NUMBER OF HOURS WORKED IN Q4 WAS LESS THAN IN 2006-Q4. The report shows total non-farm jobs also falling at a -0.5% annualized rate in Q4 and rising by only 0.4% yr/yr.

The Economic State Of The Union -- 2008

This article is one in a series from the Manufacturing & Technology News Articles

In just the past seven years, U.S. household debt almost doubled and federal debt soared by near two-thirds, rocketing by a combined $10.5 trillion. The total combined debt of households ($14.4 trillion) and the federal government ($9.2 trillion) is now 168 percent of GDP, far higher even than in the brief spike during World War II. All other levels and ratios of debt also have soared far beyond any past precedent.

Yet, this record-shattering explosion of debt stimulus created the weakest seven-year job growth (4.4 percent) and one of the weakest periods of real GDP growth (18.1 percent) since the Depression: less than 6 million new jobs ($1.8 million of debt per job) and a mere $4 trillion increase in GDP.