Freedom Line Blog

After years of Obama economic malaise, American Enterprise Institute (AEI) highlights how worker productivity is finally surging following the election of Donald Trump and implementation of his deregulatory and tax-cutting agenda:

Worker Productivity Finally Surging

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Here’s why that’s important, as AEI’s James Pethokoukis notes:

[P]roductivity increased at a rapid 3.6% annualized rate during the first three months of this year.  On a year-ago basis, this puts productivity growth at 2.4%, the fastest pace since early 2010 and far better than the 1% pace that has typified the post-financial crisis expansion.  As Barclays economist Blerina Uruci told The Wall Street Journal, ‘That means we can grow at a faster pace on a more sustained basis.  It also means the economy can run hotter for longer without causing inflationary pressure.’  Moreover, consistent 2%-plus productivity growth makes a 3% real GDP economy less of a stretch.”

In our recent Liberty Update commentary “Obama Didn’t Save the Economy, He Subdued It,” we noted the depressing fact that the current cyclical economic “recovery” under Obama is the worst since accurate recordkeeping began after World War II.

Unfortunately, it gets worse.  The U.S. Labor Department reports that economic productivity remains in the midst of its longest decline since the 1970s:

It was the third consecutive quarter of falling productivity, the longest streak since 1979.  Productivity in the second quarter was down 0.4% from a year earlier, the first annual decline in three years.  That was further down from an already tepid average productivity growth of 1.3% in 2007 through 2015, itself just half the pace seen in 2000 through 2007, and the trend shows little sign of reversing…  Productivity is a key ingredient in determining growth in wages, prices and overall economic output.”

And the culprit?  As The Wall Street Journal notes, “The slowdown in recent quarters has likely been reinforced by weak business investment in new equipment, software and facilities that could help boost worker efficiency.”  Of course, that’s what tends to happen when an administration saddles the economy with record levels of regulation and makes no real advance toward finally reducing the developed world’s highest corporate tax rate.

Thanks, Barack!