Key Labor Market Indicator
While the media focus on job creation–a classic case of make-work bias, I remain focused on the five-year average gain in productivity. Based on the revised second quarter figures, this five-year gain was at an average annual rate of
2.4 2.2 (I mistyped the first time) percent from the second quarter of 2002 to the second quarter of 2007. That is low for the 21st century, but higher than the 1970’s-1990’s. I believe that it is higher than what is needed to achieve actuarial balance in Social Security [maybe I am wrong about that–see the comments].
I should note that productivity growth gets harder and harder to measure as the variety of goods and services increases and as the service sector becomes a larger share of output.