US productivity posts sharpest fall in a year

The weak performance for productivity had been expected given that overall output, as measured by the gross domestic product, slowed to a weak annual gain of just 0.7 per cent in the first quarter. It was the slowest performance in three years.

Productivity gains have been anemic for the past decade. Since 2007, increases have averaged just 1.2 per cent. That’s less than half the 2.6 per cent average annual gains turned in from 2000 to 2007, when the country was benefiting from increased efficiency from greater integration of computers and the internet into the workplace.

Rising productivity means increased output for each hour of work, which allows employers to boost wages without triggering higher inflation. Federal Reserve Chair Janet Yellen has pointed to the slowdown in productivity as a key challenge facing the country.

The effort to boost productivity back to the levels since before the Great Recession will likely be a key factor in determining whether President Donald Trump will achieve his goal of boosting overall growth from the weak 2.1 per cent average seen since the recession. During the campaign, Trump pledged to double growth to 4 per cent or better. But since taking office, Trump’s Treasury Secretary Steven Mnuchin has said he believed that growth of 3 per cent or better is achievable if Congress adopts the president’s economic program.

Martin Crutsinger, The Associated Press

by Canadian Press

US productivity posts sharpest fall in a year

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