Asia Times: Unproductive misery

[marmar]

Unproductive misery
By Martin Hutchinson


Productivity growth, the most mysterious of economic statistics, was announced on Thursday for the first quarter of 2009 - revised upwards from 0.8% to 1.6%. After a quarter century of stellar growth from 1948 to 1973, productivity growth suddenly collapsed and remained low for the next decade. Then after 1982, it recovered somewhat, accelerating further slightly in the middle 1990s, although still not to its 1948-73 level.

In 1997, Federal Reserve chairman Alan Greenspan famously used a mysterious acceleration in productivity (later almost, but not quite wiped away by statistical revisions) to justify growing money supply considerably faster than would previously have been thought prudent. It's thus of great interest to see what might have happened to productivity growth following last September's collapse. The market took Thursday's figures as a positive signal. There is, however, reason to believe it was a false one.

It cannot be over-emphasized that the productivity performance of the US economy since 1990 has been solid but not stellar. From 1990 to 2008, according to the Conference Board's Total Economy Database, labor productivity has increased by 1.80% (2.05% in the bubble years since 1995). That compares with 1.27% in the sluggish 1973-90 period (1.00% in 1973-82) and 2.57% in the halcyon years of 1950-73.

However, even slumping and despised Japan has done better since its bubble burst, with 1990-2008 productivity increasing by 1.94% per annum. Moreover, Britain has done much better, at 2.36% per annum. On the other hand, France and Germany, at just over 1.5% annually, have done worse, as has Italy (0.93%) and Canada (1.36%). US productivity has since the 1990s put on an adequate performance, in other words, but no "miracle". ..........(more)

The complete piece is at: http://www.atimes.com/atimes/Global_Economy/KF10Dj02.html