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FT on Productivity Revisions. Exciting Stuff.
Its propellerhead head morning on the NDN blog. As if the white knuckle excitement of the deficit figures isn't enough, lets talk productivity. Some weeks ago i'm sure we were all shocked that revisions to historic US productivity figures failed to splash accross the front pages. Undiscussed as these figures might have been on Hannity and Colmes, today they get a good going over in the FT. I'm not going to quote from the article; suffice to say its a very comprehensive overview, and a good primer on the various debates about productivity growth in the 90s, and the stellar growth since. These figures - while they might be dull - do pose an intriguing economic problems. Only recently Chairman Bernanke was bullish on continued increases. He might be right; as this chart from Michael Mandel shows, the trend rate of increase is still upwards. From NDN's point of view, productivity is interesting as part of a wider puzzle about what is happening to the American economy. In particular Rob Shapiro has highlighted the theoretical link between productivity increases and wages. Even the newly revised productivity rises are historically pretty impressive. But perhaps the new lower estimates go a little way to explaining why this important link in the economy is, at least temporarily, broken.