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Slowing Productivity Growth?

Posted by: Michael Mandel on December 11

As you folks know, I’m still worrying about a slowdown in productivity growth. Here’s an interesting new chart from the New York Fed

The bar represents the probability of being in a “low productivity growth” state, given observable data on real labor compensation per hour of work and real consumption expenditure divided by hours of work. The chart shows that the probability of a productivity slowdown has risen.

An earlier, more optimistic version of their calculations were picked up by Mark Thoma and Brad DeLong.

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Reader Comments


December 11, 2006 04:23 PM

Isn't slowing productivity due to a slowing economy to be expected? With some error bounds this probably says little though.


December 11, 2006 05:23 PM

Wait, so the last 3 months before December were low probability (i.e. good news), and the most recent month is high again?

The bad 9 months of early 2006 seem to have passed, so hopefully Q406 turns in good numbers.

Then again, productivity gains are revised for 2 years, so only the 2003 numbers are final. 2004, 2005, and 2006 could swing widely before the final revision.

david foster

December 19, 2006 10:27 PM

I don't understand the right-hand chart on the detail page. Shouldn't the productivity growth shown at the *beginning* of a forecast curve equal the actual growth at that time? How can the Nov 06 curve and the Dec 06 curve have such widely divergent origin points?

Thank you for your interest. This blog is no longer active.



Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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