Americans' Productivity Rises at a 2.4 Percent Annual Rate in the First Quarter of 2000, a Slower Rate of Increase Than in Late 1999

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Thursday May 4, 3:28 pm Eastern Time

Productivity Rises at 2.4 Pct. Rate

Americans' Productivity Rises at a 2.4 Percent Annual Rate in the First Quarter of 2000, a Slower Rate of Increase Than in Late 1999

By MARTIN CRUTSINGER

AP Economics Writer

WASHINGTON (AP) -- Americans' productivity, a key to future prosperity, slowed to an annual growth rate of 2.4 percent in the first three months of this year while unit labor costs, a sign of inflation pressures, rose more than expected.

The Labor Department said that the slowdown in productivity followed a 6.9 percent surge in the final three months of last year, the best showing in seven years.

While economists had been expecting a slowdown in productivity, the amount of output per hour of work, the 2.4 percent figure was lower than they had been forecasting. And unit labor costs rose more sharply than expected, up at a rate of 1.8 percent in the first quarter.

The new report contributed to lingering unease on Wall Street, where investors fear that the Federal Reserve may begin to act more aggressively to raise interest rates, given a variety of reports showing stronger-than-expected growth and rising inflation pressures.

``This is a bad combination. Productivity rose less than expected and unit labor costs rose more than expected,'' said Oscar Gonzalez, economist at John Hancock in Boston.

Wall Street has been concerned that the Fed could boost rates at its next meeting on May 16 by one-half percentage point, double the quarter-point moves it has been making. The Fed has raised rates five times since last June.

Still, many economists cautioned against reading too much into a one-quarter change in the productivity figures. They noted that when measured over the past 12 months, productivity growth looks very strong and unit labor costs are subdued.

When the first quarter is compared to the same period a year ago, productivity is up 3.7 percent. And for the same period, unit labor costs are up a very modest 0.7 percent.

``These are hardly numbers that show a steep upturn in the underlying cost structure that would foreshadow an outburst of inflation,'' argued First Union chief economist David Orr.

Two other reports Thursday pointed to some slowing of the economy following the torrid growth rates turned in during the last six months.

Major retailers reported sales were below expectations in April as unusually cold weather dampened demand for spring clothes and garden supplies, and the number of Americans filing claims for unemployment benefits rose for a second straight week to 303,000, the highest level since early February.

For all of 1999, productivity rose 3 percent. Over the past four years, productivity growth has averaged 2.7 percent, double the weak performance of the previous two decades.

It has been this pickup in productivity that has permitted the Federal Reserve to allow unemployment to fall to the lowest levels in a generation without worrying about rising inflation.

If productivity is growing strongly, it means employers can fund wage increases out of their workers' increased output rather than being forced to boost product prices. Rising wages and no inflation translate into higher living standards.

But Federal Reserve Chairman Alan Greenspan has been cautioning in recent speeches that even if productivity continues rising, at some point wage pressures will appear, given the dwindling supply of available workers.

-- (in@the.news), May 05, 2000

Answers

We are breeding ouselves to death. The planet is turning into a dung heap created by too many people. Not enough clean water, air, and land laced with contaminants and pollution--highways jammed with cars, schools overflowing, farmland being covered over with strip malls and we just keep on breeding, and if that doesn't work, we take fertility drugs and have them by the litter.

Instead of deductions for having lots of kids, we should charge a penalty for having more than two.

-- gilda (jess@listbot.com), May 05, 2000.


Wonder to what extent all the FUD mongers who forced companies to go into extreme overkill mode for Y2K remediation and testing, and retesting, and retesting ad nauseum are to blame for this?

Productivity is a function of output for a given level of (i.e divided by) input. It follows that if lots of effort was wasted retesting and rechecking stuff just to play CYA and politically inspired appeasment games due to the hype and FUD created by North, Yourdon and many here, then output that WOULD have been created (resulting in a higher level of productivity, and thus higher standard of living) WASN'T. Thus, the lower productivity.

Another COST to us all thanks to the FUD mongers and profiteers of Y2K. Jerks -- them and you doomer drones and "usefull idiots".

Before you flame me, remember that the level of productivity determines our standard of living. So yes, the FUD mongers DID take money out of your pocket -- out of ALL of our pockets -- even if you didn't buy their books and other stuff.

The telling aspect is they didn't even get to make off with the money they "stole" from society in the decrease in productivity their FUD caused. No, they just made the entire world a bit less nicer for everybody to live in. All five BILLION of us. Says a lot about the (lack of) value in doomerism and FUD; a dark, profitless mentality indeed! If you want "sustainable living" or just the best world you can have, then throw out the FUD lest it rob you of the very QUAILITY of your life.

Suckers! Somebody got you again! Wise up! And don't get taken in so easily next time, 'ya hear?

-- ? (???@???.???), May 05, 2000.


http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=0036L6

An important enough post for it's own thread, IMO. On FUD, doomerism and productivity

-- (thread@2.thread), May 06, 2000.


Gilda,

I definitely agree with you. Of course the natural consequence of all this will be war on a global scale. It's already started and going on in various parts of the world right now. With the Globalists rapidly building up China to be the next superpower and the Russians getting ready to re-establish their empire, GET READY!

Got Preps?

I have been nibbling on a few of mine lately, just to see how they taste, and am pleased with the result, especially the freeze-dried eggs!

-- Prepper (prepper@preps.for.all), May 06, 2000.


Prepper, thanks for your reply. I'm quite giddy with shock and delight that someone agrees with me. I posted essentially the same message on the old TB board and was thoroughly trounced, flamed and cyber-beaten to a pulp.

I really think overpopulation is going to be the catalyst of big wars of the future, unless, of course, drastic steps are taken ahead of time. I doubt that foresight will help, for suggesting that people limit the number of children they have is considered treason in the U. S.

I'm glad to hear you liked your freeze-dried eggs. I haven't had the courage to try mine, but now that I have a testimonial in their favor, I'll look forward to testing them.

-- gilda (jess@listbot.com), May 06, 2000.



Wonder to what extent all the FUD mongers who forced companies to go into extreme overkill mode for Y2K remediation and testing, and retesting, and retesting ad nauseum are to blame for this? Productivity is a function of output for a given level of (i.e divided by) input. It follows that if lots of effort was wasted retesting and rechecking stuff just to play CYA and politically inspired appeasment games due to the hype and FUD created by North, Yourdon and many here, then output that WOULD have been created (resulting in a higher level of productivity, and thus higher standard of living) WASN'T. Thus, the lower productivity. Another COST to us all thanks to the FUD mongers and profiteers of Y2K. Jerks -- them and you doomer drones and "usefull idiots".

It could be argued that the effect of non-compliant sustems was slight, and that instead of a recession, it only slowed the rate of productivity increases.

More plausible to me, though, is the idea that much of the productivity gains of the past couple of years has been due to newer, faster, Y2K-compliant systems being put into use, replacing older, slower, non-compliant systems that in some cases may have previously been in use for years.

The deadline was Dec. 31, 1999.

Many companies solved their Y2K problem by buying all new systems. Now that 2000 is here, I wouldn't expect quite as many new system installations as last year. If, as they say, Information Technology has been a significant force in the productivity gains of the 1990s, then it should be no surprise that productivity gains are slowing this year.

-- Another (take@on.this), May 06, 2000.


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