U.S. Productivity Growth Is Recession Survivor

By John S. McClenahen Contrary to how it might have felt, last year's three-calendar-quarter recession did not take all the drive out of the U.S. economy. Indeed, the U.S. Labor Department has just revised upward U.S. productivity growth for this year's second quarter. Productivity in the non-farm business sector of the economy advanced at a seasonally adjusted annual rate of 1.5% in the second quarter, up from the initial estimate of 1.1%. "Year over year, productivity is up 4.8%," notes Maury Harris chief U.S. economist at UBS Warburg LLC, New York. "The data continue to confirm that the late-1990s' jump in productivity growth has survived the recession." But there is a bad-news aspect to the situation, says Bruce Steinberg, chief economist at Merrill Lynch & Co., New York. "Corporate productivity is rising at the fastest rate in 26 years, as companies continue to restructure activities," he says. Steinberg figures that during the second quarter productivity for non-financial corporations increased at a 5% annual rate. "The bad news is that, partly as a result, the labor market appears to be weakening."

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