PRESS RELEASE
U.S. a Permanently Non-Productive Economy?
May 5, 2017 (EIRNS)—Labor productivity dropped by 0.6% in the U.S. economy in the first quarter of 2017, continuing a nearly six-year period of almost no productivity growth. In the first quarter, this was a simple product of slowing business activity across the economy—shown in the 0.7% Gross Domestic Product growth rate and 1% growth rate in total business "output"—combined with worker retention; i.e., a low level of layoffs.
Total factor productivity, or TFP, attempts to measure the efficiency of use of labor and capital inputs, and to capture a measure of technological progress. According to the latest update of the National Bureau of Economic Research (NBER), TFP has averaged 0.4% growth for a decade—the slowest decadal growth ever estimated, going back to around 1900.
Raw labor productivity (output of goods and services divided by hours worked by the labor force), which in better 20th-Century times grew at about 2.5% annually, has averaged 1% annual growth for 10 years, but almost all of that was in 2009-10 and resulted from mass layoffs! Since 2011, it has averaged 0.3% growth per year.
Theories have begun to propagate among some economists that the United States economy’s near-total lack of productivity advance or growth, is now permanent. This is typified by a "four-factors" piece appearing in Forbes today and similar hand-waving. But in shorthand, the Belt and Road would reverse that "impossibility," as investment in infrastructure projects at the relative frontiers of technology would drive total factor productivity, as well as drawing the army of dropped-out workers of productive ages, back into the labor force.
