...WHILE NEW GAINS SEEM TO BE FUELING THE RECOVERY
Most of the analysis above is based on long-term trends. But the most remarkable aspect of America's productivity performance, says economist William C. Melton of ids Financial Services Inc., has come in the 1990s. "The past six quarters," he notes, "represent the first recovery period on record in which productivity growth alone brought the economy past its prerecession peak."
With third-quarter productivity growth estimated at a 3% annual rate, the data now show that nonfarm private output rose by 2.9% in the past six quarters, as productivity or output per hour jumped 3.9% and hours worked actually contracted. Indeed, the U.S. this year seems likely to post its largest productivity gain since 1976.
What's more, services productivity is on the upswing for the first time since the 1960s. Melton notes that output per hour in the service sector appears to have risen at a 2% pace in the past six quarters, more than double its rate in recent decades. "The trend," he says, "bodes well for U.S. competitiveness and for the services trade surplus, which is running at a $70 billion clip this year."GENE KORETZ