Thursday, November 02, 2006

Productivity Stalls

In the long run productivity growth may not be all that matters in macro, but it is just about all that matters if we want a higher standard of living. You should know from reading Chapter 8 that productivity refers to output per unit of labor input.
According to the Bureau of Labor Statistics, productivity growth went nowhere in the third quarter of 2006, which is not good news. Productivity growth was not the only number that was flat, so were Wal-Mart’s same store sales.

You can read the government report from the Bureau of Labor Statistics here. If reading the report would slow your productivity, you can listen to audio reports from NPR or Marketplace.

The chart on productivity is from the excellent Macro blog called The Street Light , which is written by economist Kash Mansori. For The Street Light spin on productivity report, click here. Let’s hope that the decline in productivity growth is not the start of a trend.
Extra Credit: Why is higher productivity the main source of long run growth and higher living standards in an economy? If you are the first student to send me an e-mail ( with the answer, you will be rewarded with two extra credit Discussion Board points. Only two points extra credit per student can be earned in any given week from the blog questions.

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