Luke Sharrett/Bloomberg

Productivity in the U.S. Is Sinking

Slower productivity limits the economic expansion's potential

Productivity in the U.S. fell again in the first quarter — 1.9 percent after a 2.1 percent drop at the end of last year — for the biggest back-to-back decline since 1993. 

Such productivity readings are bad news for workers, corporate profit margins and growth alike. While the data have been on a downtrend for the past decade, they've recently taken a turn for the worse that may have caught some people off guard.

Productivity measures the efficiency of the economy. The pace at which the U.S. can expand without stoking inflation — think of it like a speed limit — reflects the rate of growth of the labor force plus how much each worker can produce.

Weaker productivity, therefore, means gains in gross domestic product also will be restrained.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE