Productivity Continues Dropping in Obama’s ‘Recovered’ Economy
Nov. 3, 2016 (EIRNS)—Hidden by the celebration of the "roaring" 2.9% annual rate of Gross Domestic Product growth in the third quarter, labor productivity in the U.S. economy has dropped outright for two consecutive years through that quarter. During the Obama Administration from 2010-2016, productivity growth has averaged just one-quarter of one percent per year, easily the slowest ever recorded for a five-year period, according to the report from the St. Louis Federal Reserve. This again underlines the failed—perhaps intentionally failed—character of Obama’s 2009 American Recovery and Reinvestment ("Stimulus") Act. The tax cuts and pothole fixes under that act, which were given the fake term "infrastructure investments," had zero effect in advancing productivity in the economy.
Associated with this has been the lack of business capital investment—the Commerce Department’s fixed capital investment fell 1.4% in the year ending Sept. 30, a measure which in China’s latest reports grew 10.4% in the past year. The U.S. economy is exhibiting declining capital per worker. Multi-factor productivity growth has been negative since 2013 for both durable goods and non-durable goods production, according to the Bureau of Labor Statistics. For the latter (production of non-durables, such as food, clothes, chemicals, plastics, paper products) multifactor productivity has dropped by a very large amount, falling 8% since 2009.
Another indication of this falling capital investment was the Commerce Department report that core durable goods orders were down in September (relative to one year earlier) for the 21st consecutive month. This category, minus defense and aircraft orders, which is considered to reflect business capital investment directly, was down 3.6% from September 2015. Nationally, capital investment by both business and governments, is about 3% of GDP, very close to an all-time low.