As if labor productivity data isn’t important enough – for they track America’s performance on a crucial driver of higher living standards that can actually last – today’s Labor Department report on this measure of efficiency deserves special attention, since it contains revisions back to 1990.
Although there’s little change in either the bigger picture nor the fourth quarter or full-year 2015 results, they do confirm that the economy is experiencing a major productivity slowdown that’s crippling its chances of growing faster in a healthy – as opposed to debt-led – manner. Also left intact is manufacturing’s status as America’s labor productivity leader by a long-shot, and therefore the urgency of lifting industry out of its production growth doldrums.
Here are those key longer-term numbers – which spotlight the last three economic expansions because comparing similar stages of a business cycle is the best way to get apples-to-apples figures. Previously, the Bureau of Labor Statistics (BLS), which monitors both labor productivity and the broader multi-factor productivity measure (which takes longer to calculate and thus comes out with a longer time lag), pegged the former’s recent growth as follows:
1990s expansion: 23.00 percent
2000s expansion: 16.09 percent
current expansion: 6.22 percent
Since the 2000s expansion lasted longer than the so-called 1990s boom, these numbers show its annual labor productivity growth to have been faster. But since the current expansion is now slightly longer than its previous counterpart, it’s easy to see that the slowdown has been dramatic.
Here are the revised statistics:
1990s expansion: 23.01 percent
2000s expansion: 16.08 percent
current expansion: 6.58 percent
So the first recovery listed looks a bit better labor-productivity-wise, the next one looks a bit worse, and today’s economy looks somewhat better – but still much worse than its two predecessors.
And now for the manufacturing numbers. BLS’s old figures for its labor productivity growth were as follows:
1990s expansion: 46.71 percent
2000s expansion: 41.03 percent
current expansion: 24.89 percent
The new figures show a story differing somewhat for that for the entire economy:
1990s expansion: 49.96 percent
2000s expansion: 41.09 percent
current expansion: 24.85 percent
In other words, manufacturing’s labor productivity growth during the 1990s was a good deal better than previously thought, its sterling performance during the 2000s expansion was slightly better, and its improvement during this recovery slightly worse.
It’s still true that productivity is the performance measure that’s most controversial among economists. But all of them agree that a slump in productivity growth is among the worse pieces of economic news Americans can get. Assuming that these data are even roughly on target, your best bet for figuring out how healthy the U.S. economy really is may not be the growth or employment or wage statistics put out by Washington, but these considerably lower-profile productivity figures.