Matthew Yglesias » Productivity Surging

Matthew Yglesias » Productivity Surging: "The Bureau of Labor Statistics reports: “Nonfarm business sector labor productivity increased at a 6.6 percent annual rate during the second quarter of 2009, the U.S. Bureau of Labor Statistics reported today. This was the largest productivity increase since the third quarter of 2003, and reflects declines of 1.5 percent in output and 7.6 percent in hours worked.”

We produced a little less, but worked a lot less. Which if you think about any one person’s life might be nice. There are probably millions of people who would accept a 1.5 percent lower salary in exchange for a four extra weeks of vacation—as a country we happen to be stuck on an usually low-vacation equilibrium relative to the rest of the world. But of course that’s not what’s happening with this productivity surge. Instead, we’re seeing the emergence of a new “jobless recovery” scenario in which a return to a modest level of economic growth still won’t generate enough economic activity to cause firms to hire at a level that outpaces the natural rate of growth in the labor force. That should lead to a rise in corporate profits, but a prolonged period of flat wages and high unemployment."