1Q15 Productivity Revised Down; Now Two Consecutive Awful Quarters
On the ADP conference call yesterday, Mark Zandi at Moody’s expressed the belief that the government is not detecting productivity increases caused by disruptive technologies at places like Facebook and Snapchat.
This continues a recent pattern of people who never questioned very often initially understated data during the middle of last decade now deciding that the economy can’t possibly be as bad as the data says it is, so the data must be a problem. (See “residual seasonality.”)
Zandi and the economy’s other cheerleaders obviously doesn’t like what the government is reporting in this area, which just got worse this morning:
Nonfarm business sector labor productivity decreased at a 3.1 percent annual rate during the first quarter of 2015, the U.S. Bureau of Labor Statistics reported today, as output declined 1.6 percent and hours worked increased 1.6 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) The decline in productivity follows a decline of 2.1 percent in the fourth quarter of 2014. From the first quarter of 2014 to the first quarter of 2015, productivity increased 0.3 percent, reflecting
increases in output and hours worked of 3.2 percent and 2.8 percent, respectively.
Even if Zandi is right, how in the world do you make up for steep declines like these (a combined actual 1.3 percent — minus 0.525 percent in the fourth quarter and minus 0.775 percent in the second) with Facebook posts and Internet photos?
