• 21 hours $15,000 For Your Crypto’s Ticket To Visibility
  • 2 days The Next Fashion Frontier
  • 3 days What Is Africa’s Role In The New Silk Road?
  • 4 days Trump Was Right About The Dollar
  • 4 days Is Silver Gearing Up For A Rally?
  • 4 days World’s Largest Hedge Fund Turns Bullish On Gold
  • 4 days It’s Time To Spend More On Clean Energy R&D
  • 5 days Contrarian Investors Are Beating The Stock Market
  • 5 days Bulgaria’s Revenue Agency Falls Victim To Biggest Cyber Heist In History
  • 5 days Amazon Faces European Union Anti-Trust Probe
  • 5 days Commodities Are Having A Stellar Year
  • 6 days Bezos’ Next Big Project Could Be Worth $100 Billion Per Year
  • 6 days 3,600 Years Later, Climate Change Turns Mammoths Into $40M Market
  • 6 days Tesla, Apple Claim China Is Stealing Intellectual Property
  • 6 days EV Giants Duke It Out For Battery Dominance
  • 7 days Tech Billionaire Takes Aim At Google
  • 7 days Chinese Police Bust Largest Ever Illicit Crypto Mining Operation
  • 7 days Expect A Pullback Before Gold's Next Major Rally
  • 7 days Why Interest On Gold Matters
  • 8 days Ten Extravagant Food Items For The Wealthy Only
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

  1. Home
  2. Markets
  3. Other

QE Sponsored Stagnation: Productivity Declines Again As Unit Labor Costs Rise 4.1%

Productivity is down 1% in the first quarter of 2016 following a revised 1.7% decline last quarter.

This is the fourth productivity decline in the last six quarters.

Meanwhile unit labor costs are up 4.1% in the first quarter following a revised jump of 2.7% in the fourth quarter of 2015.

The Bloomberg Econoday consensus was -1.2% for productivity and +3.5% for labor costs.

Highlights

The nation's output is slowing despite an increase in hours worked in what is the latest signal of structural weakness for the economy. Productivity fell at an annualized 1.0 percent rate in the first quarter for the 4th decline of the last six quarters.

Output inched only 0.4 percent higher in the quarter despite a 1.5 percent rise in hours worked. Weak output makes for unwanted increases in unit labor costs which jumped 4.1 percent in the quarter for the largest gain since fourth-quarter 2014.

Trouble in output and productivity reflects what have been declines in spending on capital goods, evident in last week's first-quarter GDP report where the business investment component posted its second straight drop. Employment may be strong but the productive capacity of each additional worker is on the decline.


Productivity Trends

US Non-Farm Labour Productivity


Productivity vs. Labor Costs

Productivity vs. Labor Costs


Curious Thing

Paying people more does not get them to produce more.

Actually, what's going on is pretty clear even though economists have not yet figured it out.


QE Sponsored Stagnation and Cannibalization

Loosey-goosey monetary policy and low interest rates led to a proliferation of retail businesses, mall construction, fast food places that would not have been built in the absence of over-stimulation.

Those stores are now competing against each other. Frequently stores cannibalize their own sales.


Pick Your Poison

To achieve 2006 productivity, Study Says 20% of Mall Space Should Close.

If 20% of mall space closed, guess what that would do to employment. And if we stay on the same course, guess what happens to profits.

Meanwhile, the push for higher minimum wages is on.

 

Back to homepage

Leave a comment

Leave a comment