Arnold’s right that high labor productivity growth over the past five years is a big story. But this fact is even more impressive because labor productivity is normally procyclical. That means that during recessions, labor productivity typically falls (or at least rises at a below-average rate). The fact that it has risen to a post-war high despite the downturn of the early 2000’s is truly impressive.

Why is labor productivity procyclical? The standard Keynesian answer is “labor hoarding.” During recessions, firms retain workers who are temporarily unnecessary because they want to save the trouble of rehiring once conditions pick up again. The result is that production falls more than employment, so measured output per worker declines. The real business cycle explanation, in contrast, is that the decline in labor productivity is caused by “technology shocks,” which in turn optimally leads to lower employment. (Here’s a paper that splits the difference, concluding that both sides are half right).

Whichever theory you buy, however, record labor productivity growth during a period marked by recession is amazing. Good call, Arnold.