Press "Enter" to skip to content

Author: zhang

What is Happening to US Productivity?

The Labor Department recently reported a disappointing US worker productivity contraction of an annual percent of 2 percent in the fourth quarter of 2012. In the same timeframe, the economy declined at an annual rate of .1 percent, potentially attributed to defense cuts and slower restocking. The departure from positive numbers in the third quarter may also be due to expectations of the potential implications of the sustained fiscal cliff issue. Some economists are not surprised with the weak trend in productivity from the last two years as they see it as part of the cycle of recovery from a recession. For a period immediately after a recession, productivity will appear to rise because a smaller labor force must meet increasing demand. As demand rises, companies must hire more workers if they want to compete in the marketplace. (The full article.)

Falling Educational Attainment to Further Limit Economic Growth?

Robert J. Gordan’s paper ” Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds” challenges Solow’s theory that economic growth can be a continuous process that will persist indefinitely given productivity increases improvements in resources such as technology. One of the “headwinds” that he identifies is the pleasteau in educational attainment in the United States that hasthe country falling in international ratings of academic success. According to the OECD PISA test results for 37 nations at the secondary level, US is ranked as 21st in reading, 31st in math, and 34th in science.