Given the size of our workforce ~ still huge ~ this is an amount sufficient to negate the stimulus funds several times over.
If Obama had a monitarist policy in mind, he should have abadoned it about 2 seconds after this story came out.
And you guys into "Inflation will gobble us all up" ~ well, it certainly will, but not just yet. We continue to face improved productivity, lowered employment, weak central government (yeah, with idiots in charge it's a classical case of "weak"), and all the other problems we already had.
Onliest good news is we still got a 15% overhang in housing ~ and all things considered, that ain't bad.
Worker productivity is up because many of us are doing our job plus the job of the person that got laid off.
Yes, the few left working are working much harder.
They are also burned out and afraid. It’s scary what they don’t see in these numbers.
>>And you guys into “Inflation will gobble us all up” ~ well, it certainly will, but not just yet.<<
That is my take. That is, inflation will “gobble us all up”, but not just yet.
These numbers are close to meaningless in today’s environment.
Productivity up?
What is the relative effect on the economy of producing slightly more per manhour as opposed to the effect of more than 16% unemployed?
I agree completely. We’re still in a deflationary cycle, since the assets were valued far beyond what the market could sustain. Once we reach a form of equilibrium and velocity picks back up - hellllllllllllllllo Zimbabwe.
My wife’s “productivity” doubled Monday morning when her employer cut their Administrative Staff by half. What took six people to accomplish just last Friday is now spread among three people.
At the same time, here are the July 2009 Unemployment numbers from several Counties here in Southwest Washington that represent most of the population in the region. Mind you, the Washington State’s unemployment rate was heralded as “dropping” to “only” 9.1% in July...
Clark County: 13.7%
Skamania County: 11.2%
Cowlitz County: 12.9%
Lewis County: 12.3%
Wahkiakum County: 11.8%
Pacific County: 10.8%
Gray’s Harbor County: 12.2%
Labor productivity usually tends to improve during a recession, for rather obvious reasons: The least productive workers get fired first. This increases productivity per worker.
As for living standards, improved labor productivity only raises living standards assuming constant employment. Obviously, if the reason for improved productivity is reduced employment, well...
After all, the most efficient way of raising labour productivity is to fire all but the most efficient worker in the economy. Sure, the economy will have stopped dead, but labor productivity per worker will be hugely impressive*.
*Well, not really, as society will have collapsed. But firing the 90% “least” productive workers would have this effect even in practice.
Productivity increases another name for layoffs. Sales increases would be more meaningful.
If workers are not buying, business is not making money.
If business in not making money, business is laying off.
If business is laying off, workers are not buying.
If workers can’t get work, they vote for more government.
When government can’t provide enough work, they get in a war.
hhmmmmm
Could this mean that companies have finally shed some of their 6 figure MBAs do nothing dead weight jobs?
Nah, I’m sure few Human Resources managers, Directors of Communications, Vice Presidents of Global Support Services, Vice Presidents of Community Affairs, Vice Presidents of Consulting Services, etc., etc. have been laid off.
Hell, there’s no such thing as a salesmen anymore, they are all now Buisness Development Managers
Productivity/Smucktivity
My BS meter went off with the “living standards” part. How are the living standards for all those unemployed workers? Just how are standards improving for the soon to be unemployed workers who are picking up the load for companies that haven’t shut their doors yet? This economic stuff is confusing.
increases in productivity can help boost living standards because companies can increase wages financed by rising output.
If companies are increasing the nominal wage rates (i.e., wage rates in terms of money) from rising output then there's no net gain in productivity. In fact, rising nominal wages are the result of "too many dollars chasing too few employees", i.e., it's nothing but a sign of inflation. In the absence of inflation, the real gain from increased productivity is this: more stuff. More stuff = larger aggregate supply of goods; larger aggregate supply of goods = lower aggregate price level; lower aggregate price level = increase in one's wages in REAL (i.e., purchasing power) terms.
But during the recession, companies have been using their productivity gains to bolster their bottom lines as many struggle to stay in business.
Companies always "use their bottom lines" to stay in business, recession or no recession. That was a "filler" sentence, meant to sound ominously profound but which actually says nothing.
This cost-cutting helped many companies report better-than-expected second-quarter earnings despite falling sales.
Even in a healthy, non-inflationary economy, cutthroat competition among producers of widget X could (and often does) lead to falling sales for a particular firm. As long as the firm "uses its bottom line" to keep costs well below revenues it can have healthy earnings. Nothing new in that sentence either.
But economists worry that such aggressive cuts will make it harder to mount a sustainable recovery.
Only some economists worry that when businesses pursue their self-interest and readjust their configurations of factors of production -- land, labor, and capital -- will it be harder to "mount a sustainable recovery." Those economists would be the Keynesians, who wrongly believe that spending is the ultimate source of wages, and not saving, i.e., capital accumulation (which inflation erodes). To Causal-Realist economists -- sometimes known as the Austrian school of economics -- the "aggressive cuts" are part of the "sustainable recovery"; in fact, there can be no LONG RUN, sustainable recovery without them.
Consumer spending is critical to the recovery since it accounts for about 70 percent of total economic activity.
Spending is already occurring in the economy but it's being done in the area of higher-order goods, rather than immediate consumer goods. Unless the article is accusing people of putting their money under their mattresses, spending -- either consumption spending or capital-goods spending -- always occurs. The problem with this article -- and the problem with those economists and conservatives who agree with it -- is that it assumes that an inflationary bubble economy is the norm and that everything should be measured against the "boom." Keynesians are congenitally incapable of accepting that the "bust" phase of the business cycle is the inevitable and necessary readjustment from a period in which inflation caused malinvestment (which includes hiring people for new businesses, or expansions of existing businesses, that would not have taken place in a healthy, non-inflationary economy).
Businesses producing more with fewer employees means that unemployed Americans continue to face a dismal job market.
According to this logic, a non-dismal job market would be for the U.S. economy to adopt the methods of a poor, socialist African village: abolish all labor-saving machinery and capital that increases worker productivity and hire everyone in the village to dig ditches with teaspoons -- low productivity and full employment!
While many of the nation's big retailers have said back-to-school sales have been dismal, the government's Cash for Clunkers program did boost auto sales in August.
Econ 101: Part of the reason that back-to-school sales have been dismal is precisely because of a government subsidized "Cash for Clunkers" program. "Cash for Clunkers" may have boosted auto sales but only at the expense of shrinking the sales for goods X, Y, and Z -- those goods that people would have purchased had the money for them not been siphoned off by government to subsidize "Cash for Clunkers." Government merely redistributed sales that would have occurred elsewhere in the economy to sales for new, "efficient" automobiles. In short, it shifted sales away from items that consumers actually wanted to items that they normally would not have wanted. Additionally, "Cash for Clunkers" destroyed cars that were already bought and paid for -- debt-free cars -- and encouraged people to get back into debt (or get further into debt). It also diminished the supply of older, used cars, that would have sold on the used car market for less money than new cars -- the used car market being the main supply of cars for those with low incomes. According to this logic, why stop at cars? Why not "Cash for Old Toaster Ovens"? or "Cash for Incandescent Light Bulbs"? Or "Cash for Old Clothes"? The mind boggles at the stupidity of it all.