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Continuous decline in the third quarter non-farm productivity and its longest losing streak since 1979

by:Deyuan      2020-12-23
Released today, the United States in the second quarter of initial value for the third consecutive quarter of decline in non-farm productivity, labor productivity is still stalled in the United States.

- the United States in the second quarter non-farm productivity initial value 0. 0 5%, far less than expected. 4%, for the third consecutive quarter of decline, at the longest continuous decline since 1979, productivity decline speed and the highest since 1993.

the deutsche bank analyst Dominic Konstam team thought that sustained low productivity means, for the fed, to maintain total demand is very important, especially in the case of employment growth is slowing. When the factors of production labor is scarce and expensive, the enterprise's desire to increase capital investment to reduce.

Konstam explains the logic:

the corporate sector is unlikely to increase investment in the case of demand is low, and historically, productivity rose obviously needs the support of the investment.

enterprise staff is the consumer at the same time, the employment growth will lead to demand is suppressed is obvious.

according to the fed's actions, Konstam said in the report, the Labour market to maintain a healthy state, the fed may be cautious to raise interest rates, but you need to pay attention to avoid a downward pressure to stimulate demand, otherwise, the labor rate of growth will be in trouble. Any downward pressure caused by the federal reserve is likely to be the real adverse impact on private investment.

Michelle Meyer, an economist at bofa merrill said in a note:

with potential economic growth, landslide, the equilibrium interest rate is reduced.

in the case of an inflation target of 2%, the fed will balance the federal funds rate R * substance set at 1%, short-term interest rates close to zero.
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