Key man the US Federal Reserve, Janet Yellen, outlined the main problems for the US economy for 2016 and beyond. All the more or less standard. Weak domestic demand (consumption), braking China, sluggish, inflation, etc. Among other things -. Labor productivity - by AMarkets materials.
Over the past 7 years, productivity has not grown in the United States. According to Yellen, this situation - as if a norm of life in the atmosphere of the Great Recession. All hard, but the US economy is definitely going to make it - companies will resume investment activity (the head of the Fed, however, does not specify what type of investment in question), the business will continue to grow, wages increase. Blah blah blah. Optimism Ms. Yellen - this is certainly good, and maybe even someone to cheer. But the reality is harsher. In general, how important productivity? In the long term, this figure - a key determinant of global quality of life, implying growth of salaries without increasing production costs. When was the last time there was such, that salary costs have grown without growth? During the reign of Yellen and Bernanke this certainly was not. However, Yellen continues to stubbornly insist that the economy is growing - companies are creating new jobs, and hence, all is well. However, the same company for some reason not in a hurry to invest in CAPEX, limited hiring new people.
The manufacturing sector in the US, and around the world, shrinking for three consecutive years. In the last three quarters, the second quarter of 2016, US GDP gained less than 1%. At the same time the Bureau of Labor Statistics regularly reports about achievements. The total number of hours worked increased by 2.13% on average over the three quarters. This is slightly less than what took place in the period 2004-2007. (Recovery after the collapse of the dot-com bubble).
On the chart - the dynamics of the GDP revision regulator HIF Amid positive BLS reports:
What happens in this situation with the index of labor productivity? If working hours increased by 2.13%, and generated gross domestic product grew by only 0.94%, it turns out that productivity was minus 1.19%. That is, it has fallen. Index was in such bad shape only in 1979 at the peak of the Great Inflation just before the start of the grave three years of recession. The second year of this recession was the most depressed, if you count from the first post-war years and until 2008.
Statistics 1979 is relentless: the increase in labor hours to 2.18% with an increase in production of only 0.83%, led to a decline in labor productivity by 1.35%.
Schedule - labor productivity in 1979 and in the last three quarters of 2016:
The logical question is - how should correlate productivity with the number of hours worked to be able to talk about real rather than a mythical economic growth? Response - approximately as shown in this graph. In other words, productivity must grow due to lower number of working hours.
The bottom line is we have what Ms. Yellen powders public brains, made a statement on sustainable economic growth, which is achieved through the creation of new jobs. The truth is that without taking into account the performance factor, even the most positive statistics - nothing insignificant dummy. Companies are unwilling to invest in the development of production. The only interest of their investment - buy-back of own shares (cost borrowed money). Without investments in CAPEX US economy will not be able to reach the level of real growth.