US productivity rises 7.3%, biggest increase since 2009

SILVER SPRING, Md. — U.S. productivity rose at a 7.3% rate in the second quarter, the largest quarterly increase since 2009. Labor costs also jumped, rising 12.2%.

The Labor Department report Friday is its first estimate of second-quarter productivity and follows the first quarter’s 0.3% decline. Labor costs rose again in the second quarter after rising at a 9.8% rate in the January-March quarter. It’s the biggest jump in labour costs since 2014.

Productivity mostly lagged during the record long 11-year expansion that followed the Great Recession, confounding economists. Defined as the amount of output per hour of work, productivity is the key to rising living standards, and the slow pace of growth in recent years has been a major reason that wage gains have stalled.

From 2000 to 2007, the year the Great Recession began, annual productivity gains averaged 2.7%. But since then, productivity has slowed to about half that pace, rising at an average annual rate of 1.4% from 2007 through 2019. The 2019 rate of 1.9% brought some optimism that productivity was on the rise, but the coronavirus pandemic hit in the first quarter of 2020, obliterating the economy and taking virtually every economic indicator down with it.

Economists have warned that the economic disruptions caused by the coronavirus would likely hinder productivity in coming quarters.

Last month, the government reported an astonishing 32.9% plunge in second-quarter gross domestic product, the value of goods the country produced in the April-June quarter. It was the sharpest such drop on records dating to 1947, and almost entirely related to the fallout from the coronavirus pandemic, which has shuttered business temporarily and permanently, sending millions of workers to the unemployment line.

The Trump Administration has predicted a third quarter economic rebound, but many economists think that the economy can’t fully recover until the virus is mostly defeated.

The government will issue a second productivity estimate next month.

Matt Ott, The Associated Press

U.S. Economy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

City’s COVID-19 cases jump to nine from six

Central zone active cases remains lowest of all zones

City of Red Deer trims staff by five per cent to deal with new economic realities

Downsizing of the municipal workforce will cut the annual budget by $7 million

Boys and Girls Club haunted house cancelled

Popular spookfest postponed because of pandemic health restrictions

Demand at Catholic Social Services jumps during pandemic

Provincial fundraising campaign launched

QUIZ: A celebration of apples

September is the start of the apple harvest

Murray, Nuggets hang on in Game 3, cut Lakers’ lead to 2-1

Murray, Nuggets hang on in Game 3, cut Lakers’ lead to 2-1

Indians clinch post-season berth; Braves claim NL East title

Indians clinch post-season berth; Braves claim NL East title

Major League Rugby to kick off fourth season in March 2021 with 13 teams

Major League Rugby to kick off fourth season in March 2021 with 13 teams

Mickelson and late-night range session key for DeChambeau

Mickelson and late-night range session key for DeChambeau

Toronto FC learns rest of rejigged MLS schedule, with a busy October ahead

Toronto FC learns rest of rejigged MLS schedule, with a busy October ahead

Andreescu out for rest of tennis season to focus on health and training

Andreescu out for rest of tennis season to focus on health and training

Cole has sharp playoff prep as Yankees rout Blue Jays 12-1

Cole has sharp playoff prep as Yankees rout Blue Jays 12-1

Jeff steps down as FC Edmonton coach, will stay on in player development role

Jeff steps down as FC Edmonton coach, will stay on in player development role

Most Read