During the fourth quarter of 2004 the U.S. experienced a paltry 0.8 percent increase in productivity, the weakest showing since a 0.4 percent drop in the first quarter of 2001.
[T]he Labor Department reported Thursday that productivity for the final three months of the year was up at an annual rate of just 0.8 percent, which was the slowest quarterly increase in almost three years.
The rapid gains in productivity began slowing in the July-September quarter when productivity rose by just 1.8 percent after increases of 3.7 percent in the first quarter and 3.9 percent in the second quarter last year.
Productivity, the amount of output produced for each hour of work, is the key factor in boosting living standards because it allows companies to pay their workers more based on their increased efficiency without having to resort to raising the price of their products, which would increase inflation.
The strong productivity gains have kept the lid on inflation, but now with productivity slowing, some analysts are concerned that the Federal Reserve will abandon its gradual approach to raising interest rates should wage pressures begin to mount.
Looks like the vain search for My Bush Boom will continue tomorrow.
On Friday, the government will report on unemployment in January. Many analysts are looking for the jobless rate to remain steady at 5.4 percent with businesses adding 200,000 workers to their payrolls, an improvement from the 157,000 jobs added in December.
We’ll see if we added 200,000 jobs in January.