Obviously this morning’s GDP report is extremely depressing, with growth being revised down from -3.8% to -6.2% in the fourth quarter.
Let me just highlight one interesting implication. Based on the original GDP data, productivity growth in the fourth quarter was 3.2%. That was a fairly positive number.
But today’s data release shows that the growth rate of “nonfarm business gross value added”—which is the numerator for productivity growth—was revised down from -5.5% to -8.7%.
That decline of 3.2 percentage points wipes out all the productivity growth from the fourth quarter. So in fact, despite all the job cuts, companies have not gotten out ahead of the fall in the economy.