The productivity miracle continues with today's report of a 6.9% annual rate increase in Q4 output per hour of labor over the previous quarter. Now to put that amazing claim into perspective, the annual increase in productivity rates during the internet boom from '97-2000 were; 1.5%, 2.9%, 3.3% and 3.4% respectively. However, the last three quarters of 2009 were reported by the Bureau of Labor Statistics to show productivity increases of; 7.6% in Q2, 7.8% in Q3 and 6.9% in Q4.
I went through the last 20 years of productivity data and couldn't find anything close to those three consecutive quarterly booms in output per hour of work. It sort of like saying at the start of Q2 2009 we invented the internet and the wheel on the same day.
What makes the claim of surging productivity even more amazing is that the U.S. economy is comprised of nearly 90% services. That means waitresses must be kicking people out of restaurants before they are finished eating or people have learned to eat much faster. Then again maybe doctors have learned to truncate their exams of patients or perhaps they have somehow found away to eliminated the second waiting room you have to sit it once you get past the reception area.
I guess productivity gains can come by magic just through the process of firing workers. Somehow we were are able to increase the output of goods and services as a nation even though 8.4 million people have lost their jobs and hours worked are down. What a relief it must be for businesses to shed themselves of all that dead wood. If we are to believe these productivity numbers we also must believe those formerly employed individuals were doing nothing at all but standing around with their thumbs up their bum. Call me skeptical.
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