Year-Over-Year Productivity Negative for 5 Quarters, That's Never Happened Before

MISH Talk ^ | May 4, 2024 | MISH

[ConservativeInPA]

Today the BLS released Labor Productivity and Costs for 2023 Q1. Let's take a look.

Labor Productivity Details

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers. Nonfarm business sector labor productivity decreased 2.7 percent in the first quarter of 2023

Output increased 0.2 percent and hours worked increased 3.0 percent. From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.9 percent, reflecting a 1.3-percent increase in output and a 2.3-percent increase in hours worked. The 1.1-percent rate of productivity growth in the current business cycle thus far is a historically low productivity growth rate; no other previous business cycle had lower productivity growth, except for the brief six-quarter cycle from 1980 Q1 to 1981 Q3, which exhibited 1.0 percent growth. The 0.9-percent productivity decline is the first time the four-quarter change series has remained negative for five consecutive quarters; this series begins in the first quarter of 1948.

Unit Labor Cost Details

Unit labor costs in the nonfarm business sector increased 6.3 percent in the first quarter of 2023, reflecting a 3.4-percent increase in hourly compensation and a 2.7-percent decrease in productivity. Unit labor costs increased 5.8 percent over the last four quarters. Real hourly compensation, which takes into account consumer prices, decreased 0.3 percent in the first quarter of 2023, and declined 1.0 percent over the last four quarters.

What's Going On With Productivity?

- Biden rules and regulations
- Biden's clean energy push including the ridiculously-named Inflation Reduction Act (IRA)
- Retiring baby boomers are replaced by less skilled workers

[ConservativeInPA]

Inflation is caused by too many dollars chasing too few goods. The solutions to inflation are to reduce the dollars in the economy and to increase productivity so there are more goods at a lower unit price. The later is partly uncontrollable because America imports so much crap from other countries. However, I expect there are systemic domestic productivity problems that boils down to a change in focus in corporate America. There is so much attention placed in woke and other perverted issues that corporate management no longer places a priority on increasing shareholder wealth. If fact, the phrase, 'increase shareholder wealth' is somehow considered offensive. Things like ESG and some misconstrued forms of justice take precedence over efficient and productive operations.

The article’s last point about boomers retiring is entirely impotent. There are now multiple worthless generations in the workforce. 'Unskilled' does not adequately describe their lack of ability. It’s a mentality that goes much deeper than skill sets.

This mentality is also reflected in politics. All too many people look towards government to manage everything in their lives. Regulations are desired by these lazy asses. These same morons seriously believe that government spending, such as the now increased estimate of $1.04 Trillion of the Inflation Reduction Act, will cure inflation. All it does is pumps money into the economy in the most unproductive manners possible. It’s a double whammy. Not only it creates more dollars, it decreases productivity. Both cause inflation.

[nickcarraway]

Why do people keep saying we aren’t in a recession, when we have been for over a year?

[Jeff Chandler]

[Parley Baer]

“Why do people keep saying we aren’t in a recession, when we have been for over a year?”

If Trump as in office the media would be pushing recession for over a year now.

[antidemoncrat]

Something else for Joe to brag about ... Hey, it’s only been for 5 quarters ... under Trump is was 25 quarters ...

[ConservativeInPA]

Excellent observation. To put it bluntly, productivity is in a recession. Think about what that really means. Negative GDP for two consecutive quarters is no longer an effective indicator of recession. The problem with using GDP is that government spending increases GDP. The government doesn’t build a damn thing. It only gets in the way of production. The other, but lesser known and acknowledged indicator of inflation, inverted treasury yield curves, has been spot on. BTW, we can thank John Maynard Keynes for the way GDP is calculated. It is incompressible as to why our government and institutions like the Federal Reserve hold onto the antiquated and empirically proven incorrect notions from a socialist economist.

[mewzilla]

And NYS just jacked it minimum wage.

Again.

Productivity bedamned.

[linMcHlp]

“Inflation is caused by too many dollars chasing too few good.”

Some times.

Present day inflation is mostly caused by artifice - leftists and eggheads forcing the increased costs of energy.

[catnipman]

“Year-Over-Year Productivity Negative for 5 Quarters, That’s Never Happened Before”

guess we gonna need more AI cow bell ...

[Carriage Hill]

We’ve been in a Recession since 1.20.21, and we’ll be sliding into a Depression — not on the order of 1929 — this Summer. Prep for it.

[nickcarraway]

I think that’s about a year early. 2021 may have been my best year ever, for my business.

[Carriage Hill]

There was a period of Trump’s ‘goodness’ leftover for a while, but we were in a Recession the minute that POS was sworn-in. Not all businesses and people were affected immediately, but it was underway.

[NWFree]

Don’t worry the fake media will tell you it’s all good

[ConservativeInPA]

Don’t worry the fake media will tell you it’s all good.

My pea brain can only retain that until I go to grocery store.

[CFW]

“Why do people keep saying we aren’t in a recession, when we have been for over a year?”

I’ve wondered the same. Economists and “experts” have been massaging the numbers, changing definitions, and ignoring facts that do not support the narrative that our economy is booming.

Another issue being ignored:

https://www.zerohedge.com/geopolitical/escobar-global-de-dollarization-nearing-crossroads-moment

[GaltAdonis]

So the American people were/are supposed to be 'productive' -
even when tangled in face masks, lock downs, and all the
rest of the pointless BS?

[PGR88]

Its the 1970s all over again, but much worse. America needs some serious supply-side reforms to blow up the bloated woke regulatory state.

Its far worse now than in the late 1970s though - we are far deeper in debt, our demographics are very top-heavy, society and culture are badly divided, and neo-marxism has a hold on Washington DC.

In sum, there is no stomach in America for even small reforms

[Texas resident]

We are in the 50 year cycle. 1870’s, 1920’s, 1970’s and 2020’s. But this time, the govt is working like hell to make it as painful as possible for us.

[ConservativeInPA]

You are correct. The parallel to the current economy is the mid-70’s. We are at the beginning of a very long stretch of bad times. You are also correct about the debt. I tried explaining all this to my then 25 year old daughter well over a year ago. I played one of the 1980 Presidential Debates between Reagan and Carter to help her understand how things are similar today to then.

It is hideous that so few people learn from history.

If you have time, watch the linked video. It is uncanny how so many problems reoccur; just the names and amounts change. History rhymes.