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.