Productivity Pickup

Productivity for the third quarter of 2017 rose 3.0%, the largest one quarter increase since the third quarter of 2014 and over double the average quarterly growth rate since the start of 2009. This surge is significant, as a lack of productivity growth has been one of the main factors that has kept U.S. economic growth, as measured in gross domestic product (GDP), to an average of just 2.2% since the end of the Great Recession. In fact, the five-year average of productivity growth has been under 1% since the fourth quarter of 2014. Dating back to the start of record keeping in 1947, 1981 to 1983 was the only other period with productivity growth as slow. While productivity can fluctuate quite a bit from quarter to quarter, supporting evidence from increased spending on capital goods and the slow continued unwinding of labor disruptions from the Great Recession lead us to believe that a return to a healthier rate of productivity growth may be here to stay.

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