Yesterday the Bureau of Labor Statistics released its measure of nonfarm productivity. U.S. productivity slowed to a 2.0% annual pace, but relative to the U.K. and Germany, the silver lining shows the innate resilience of the U.S. economy. Once the U.S. economy emerges from the recession, productivity will propel economic growth forward.
The October employment report was about as bad a report as could be. It is now very clear that firms are laying off workers and clinging to any productivity that they can muster up (See this post for my more sanguine outlook based on U.S. productivity).
Barack Obama from Bloomberg:
“Even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime — two wars, a planet in peril, the worst financial crisis in a century,” he said. “There is new energy to harness and new jobs to be created; new schools to build and threats to meet and alliances to repair.” Barack Obama has avoided answering the ultimate question: How is he planning to pay for a new energy program, an overhaul of the health care system, new schools, new infrastructure, tax cuts to the middle class, and don’t forget the massive stimulus package that is almost certain to pass Congress. If it is by new debt-issuance by the Treasury, here is what he is up against.