Revised BLS Numbers Challenge Productivity Assumptions
August 30, 2001
The Bureau of Labor Statistics has issued revised productivity figures for the late 1990s into 2000. They are significantly lower than earlier numbers and some experts see them as shooting down the theory that the computer revolution laid a foundation for more rapid economic growth in the long run.
Productivity is the amount of goods and services produced per hour of work. Improving productivity is essential to increasing profits and wages in the economy.
- Originally, productivity was reported to have grown at nearly 2.9 percent a year from 1995 to 2000.
- That would be double the 1.4 percent rate of growth from 1973 to 1995.
- But the new numbers indicate that the actual rate of productivity growth was only slightly above 2.5 percent a year in the 1995-2000 period.
- The 2.6 percent growth rate in 1999 was cut to 2.3 percent -- and the 4.3 percent rate originally reported for 2000 was reduced to 3 percent.
Some economists contend that the lower numbers cast doubt on the Congressional Budget Office's projected $5.6 trillion federal budget surplus over 10 years.
In fact, the CBO this week adjusted downward its forecast of the future surplus and cut the expected long-term rate of annual productivity growth to 2.5 percent.
However, economists suspicious of permanent productivity-enhancement theories also point out that significant progress has been made in improving productivity -- amounting to perhaps half a percentage point per year -- and that in the long term that gain will be significant.
Source: Jeff Madrick (Challenge Magazine), "A Tarnished New Economy Loses More Luster With Revised Productivity Data," New York Times, August 30, 2001.
For 2nd Quarter 2001 BLS Productivity Release
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