Implications: Productivity was revised up for the second quarter, consistent with last week's slight upward revision for real GDP growth. Output was revised up while the number of hours worked were revised down, which means more output per hour. Productivity is up only 1.2% in the past year, versus an average annual growth rate of about 2% over the past couple of decades. However, we do not think this means the productivity revolution has come to an end. It is not unusual for productivity to surge at the very beginning of a recovery and then temporarily slow down as hours worked increase more sharply. We believe the long-term trend in productivity growth will remain strong, due to a technological revolution centered in computer and communications advances. In other recent news, automakers reported strong sales growth in August. Cars and light trucks were sold at a 14.5 million annual rate, easily beating the consensus expected pace of 14.2 million. Auto sales were up 3.1% from July, up 16.6% from a year ago, and – with the exception of cash for clunkers, when the government was handing out $4,000 checks to buy a car – the fastest pace since April 2008. Sales are being supported by job growth, wage growth, and low financial obligations among consumers. We continue to look for more sales gains in the year ahead.
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Posted on Wednesday, September 5, 2012 @ 2:19 PM
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