Productivity Growth

The Wall Street Journal reports that productivity has been soaring the past three quarters, averaging 7.3% growth. That is almost three times the 2.5% annual productivity growth the U.S. economy experienced from 2000-2008.

In short, employers are able to squeeze more production from fewer employees. This is a typical pattern during a recession as employers look to cut costs in the face of economic challenges.

To date, the increase in productivity has been greater than during a comparable period in the last recession in 2001 (see this data from the Bureau of Labor Statistics). This may be evidence that businesses are reacting to the risks they face due to Obama's policies on healthcare, global warming, taxes, and control and regulation of the financial and auto sectors.

If the future looks uncertain, it is easier and safer for a business to hunker down, cut costs, and conserve cash than invest for growth.

Such is the real nature of Obama's efforts to stimulate the economy.