US worker productivity rose at a 7.3% rate in Q-2, the largest Quarterly increase since 2009. Labor costs also rose 12.2%.
The US Labor Department report Friday is its 1st estimate of Q-2 productivity and follows Q-1’s 0.3% decliner. Labor costs rose again in Q-2 after rising at a 9.8% rate in Q-1. It is the biggest jump in labor costs since 2014.
Productivity lagged during the record long 11-yr expansion that followed the Great Recession.
Defined as the amount of output per hour of work, productivity is the Key to rising living standards, and the slow pace of growth in recent years has been a major reason that wage gains stalled.
From Y 2000 the year the Great Recession began, annual productivity gains averaged 2.7%. But since then, productivity has slowed to 50% that, rising at an average annual rate of 1.4% from Ys 2007 through 2019.
The Y 2019 rate of 1.9% brought some optimism that productivity was on the rise, but the coronavirus chaos hit in Q-1 Y 2020, obliterating the economy and taking virtually every economic indicator South with it.
The Trump Administration has predicted a Q-3 economic rebound.
The government will issue a 2nd productivity estimate next month.
Have a healthy day, Keep the Faith!