Today's job numbersBy
If you are worrying about the economy, don’t start with the weak job report—start with yesterday’s productivity report. Nonfarm productivity has only risen by 0.9% over the past year. The four-quarter average of nonfarm productivity has only risen by 0.5%, the smallest increase since 1995.
Productivity growth establishes the sustainable growth rate of the economy. The fact that productivity growth is so slow has two consequences. One, it means that the economy is much more vulnerable to shocks that can push it into recession. Second, it puts Bernanke into a bind…with productivity slow, he has to be much more worried about inflation.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.