The labor productivity figures released Aug. 9 by the Labor Department showed, as Harvard economist Jason Furman had warned it would, the worst productivity collapse over any two quarters in the 75 years of this economic measurement. The second quarter’s 4.6% drop followed the fall of 7.4% in the first quarter, to make a 12% collapse. The context makes it worse, because labor productivity growth on average is now below zero for three years, from mid-2019 to now, and below 1% for the past 10 years. Growth in technological productivity (so-called total factor productivity) has been below 0.5% since the crash of 2008.
Here is the most telling comparison between the American and Chinese economies: Growth of labor productivity in China has not fallen below 6.5% annual since the global financial crash of 2008, with the exception of 2020, when it was “only” 2.7%; total factor productivity growth has not gone below 2.5% annually (National Bureau of Statistics of China, Cornell Univ. CEIC Data).
