The United States have seen a productivity drop by as much as 0.6%. As labor costs spiked, productivity did not keep pace.
The decline was greater than previously estimated. This is the third quarter in a row when productivity keeps falling. Costs with labor rose at 4,3 percent, annually.
In economic terms, productivity is the amount of value a worker produces. In other words, it measures the output per hour of work. This factor is supposed to bring up the standard of living. But productivity has been staying behind economic growth.
Economic growth of the GDP was low, at 1.2 percent. That figure is the lowest measure of the post-World War II period. Economist officials believe the decrease in productivity has generated the economic downturn. Janet Yellen, Federal Reserve Chief points out that productivity is a big challenge facing America.
Some economists believe that businesses should raise the efficiency of their current employees, instead of hiring new ones to meet demand. They advise companies to focus more on productivity. Once the market reaches full employment, the available qualified worker talent pool will diminish.
Not too many Americans have sought unemployment benefits in the last period. That’s a good sign for the jobs market.
The Labor Department has found that the number of people who collect unemployment checks has fallen by 4.4 percent, to 2.16 million.
The increase in hourly pay influences profit margins, according to the chief US economist Joshua Shapiro.
Apparently, the advances in technology and information technology which fueled the previous growth of the nineties are starting to fade. The Internet boom, the Space program and the rate of automatization have stalled. This has come at a cost for US economic productivity and the GDP (gross domestic product).
America is entering the third consecutive quarter of productivity decline. This could take its toll on profits, worker pay and economic growth in the next few years.
Federal Reserve Chairwoman Janet Yellen expressed an opinion that as a society we should aim to increase productivity.
Ms. Yellen gave a few solutions to the increasing productivity problem. Investing in education and worker training or spending more on research could be beneficial in the long term.
The economic block is a reality not just in the US, but also in Europe. In 2014 most advanced economies have stalled. According to economic officials, it looks like it’s a long-term slump.
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