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Logan Mohtashami says

I find this chart a little bit perplexing. Usually productivity increases when unemployment is increasing, because the most unproductive workers are the first to lose their jobs. Vice versa when unemployment is falling, because businesses are forced to hire the least productive bums.

Strategist says

I find this chart a little bit perplexing.

That is probably because the caption is wrong. Productivity is not falling. It is growing at a slower rate than in the past. The past rates of high growth in China and Japan resulted probably from mechanization and automation, and shifting from agriculture to manufacturing, delivering huge increases in productivity partly by copying or importing advanced equipment and techniques. As countries catch up with the leading edge of technology, their productivity growth rates fall into line with the already industrialized countries.

Also, the process of recruiting, hiring, and training people interferes with productivity. If a software engineer must travel to a college campus to interview 20 possible recruits in order to fill 2 jobs, then (s)he cannot code during that time. If each hire requires 4 interviews, including travel, then the hiring process consumes a lot of otherwise potentially productive time, reducing productivity.

Strategist says

I find this chart a little bit perplexing.

Rate of growth of productivity is falling like the chart shows, this is similar to inflation and wages

Cumulative growth is always rising but the rate is just much slower

Inflation is the same trend direction

Cumulative chart looks like




Rate of growth looks like

Strategist says

unproductive workers are the first to lose their jobs. Vice versa when unemployment is falling,

Another way to look at this and this is my most favorite productive chart ever as you can see we don't have much going with construction for a long time now

If we can ever get productivity growing in construction that would be very beneficial for this country




Recent data in total productivity

Just like in wages, people think that wages are falling for years but it is just the rate of growth, even if you broken them down to many sub categories, we haven't had a negative wage cycle but the rate of growth is slow recently but still much higher than inflation itself

curious2 says

potentially productive time, reducing productivity.

This is also a good point productivity if done by a company through either investments or training does initially take away from productivity data as it takes time train people, so if people were looking for some boom in productivity rate of growth through investments that were supposed to be happening this year you really need to wait until 2019 to see it in the data in a more clean setting.

Strategist says

most unproductive workers are the first to lose their jobs

Strategist says

because businesses are forced to hire the least productive bums.

On another note I was on Bloomberg Financial recently talking about your favorite subject

https://www.bloomberg.com/news/audio/2018-05-23/there-is-no-such-thing-as-affordable-housing-in-america

Thanks for a great post Logan. 2018 the year of fake economic data.

https://www.ft.com/content/c8aa1f1c-faae-11e7-a492-2c9be7f3120a

everything says

2018 the year of fake economic data.

The real interesting data line going out now for the next 12 months is this

We have near 6,600,000 job openings and civilian labor force that is unemployed currently is at 6,065,000 ( Some of this) natural discharge of layoffs that happen each month. Hence why a 0% unemployed rate is impossible and why unemployment claims cant go to zero either.

Breakdown the data even more real unemployment rate is roughly 3% and below today when you breakdown the data to a prime age labor force factor model

Men and Women ages 20 and above are Under 3.5% combined, teenagers are running at 12.8% but college grads are running at 2% unemployment rate 3.2% with some college