WASHINGTON – the AMERICAN workers, the productivity of the jump of 3 percent in the third quarter, the strongest gain in three years, while labor costs remained moderate.
The increase of the productivity in the July-September quarter was double the 1.5 percent gain in the second quarter, the Labor Department Thursday reported. Unit labor costs rose a modest 0.5 percent in the third quarter, up only slightly from a 0.3 percent gain in the second quarter.
The strong upturn in productivity, the amount of output per hour worked, is not likely to last. But economists are hopeful that the future gains will be stronger than the anemic performance of the past few years. Economists say that the increase of the productivity is the biggest challenge for the economy at this time and without an improvement of the Trumpet, administration of the objective of stimulating economic growth will not be realized.
The stronger increase of the productivity in the past two quarters, followed less than a 0.1 percent gain in the first quarter of this year. The improvement was due to the fact that the total production, as measured by the gross domestic product, accelerated sharply after a weak start of the year. GDP grew at an annual rate of 3 percent in the third quarter, the government reported last week, and that followed a 3.1 percent rise in the second quarter. It was the first back-to-back GDP gains of 3 percent or higher in three years.
Productivity actually declined in 2016, falling by 0.1 per cent. It was the first annual decline in 34 years and followed a series of weak annual performances since the economy emerged from the Great Recession in mid-2009.
Productivity of the average annual income of just 1.2 per cent from 2007 to 2016, a sharp slowdown from the average annual gain of 2.6 percent from 2000 to 20007, increases that are the result of an increase of an increased use of computers and the internet in the workplace.
Rising productivity leads to higher output for each hour of work, allowing employers to boost wages without higher inflation.
The challenge is to stimulate the productivity back to the levels from before the Great Recession of 2007-2009 will be an important factor for determining the question of whether a President Donald Trump can achieve his goal is to stimulate the overall growth of the modest average annual gain of 2.2 percent during the current recovery, now in its ninth year.
During the campaign, Trump promised to double growth of 4 percent or better. Are budget forecasts a still ambitious to increase to a profit of 3 percent per year, as Trump the economic program of tax cuts, deregulation, and stricter enforcement of the trade laws of power.
Private economists say that the weak productivity and the ageing of the population make the achievement of even 3 per cent annual growth of the GDP with a real challenge.