Dept. of Labor Reports Unsettling Trend in US Labor Market

Dept. Of Labor Reports Unsettling Trend In U.S. Labor Market

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( – The National Bureau of Economic Research’s Business Cycle Dating Committee is the organization that determines whether the country is in a recession. To date, it has not declared one. But, this doesn’t mean the economy is in good shape. In fact, some experts believe the US is actually in a downturn.

New numbers from the Labor Department about productivity aren’t going to make those experts feel any better about the country’s current economic climate.

Labor Productivity

On Tuesday, August 9, the Labor Department’s US Bureau of Labor Statistics released its data for productivity and costs. It showed that nonfarm businesses saw a productivity reduction of 4.6% and an output decrease of 2.1% for the second consecutive quarter.

Worse, there was a 2.5% decrease in productivity compared to the same period in 2021. According to the news release, it’s the largest decline since 1948.

What Is Labor Productivity and Why Does It Matter?

Labor productivity is just what it sounds like, it measures the hourly output of the United States economy. This is largely driven by technological progress, human input, and investment in capital. It’s not the same thing as employee productivity, or how much workers are accomplishing in one hour.

The labor productivity rate is directly related to how much people are paying for goods and services. When it’s high and growing, Americans get more for their money because everything is more reasonably priced. When productivity shrinks, the opposite is true.

Economists look at this rate as one of the tools they can use to measure how well the economy is doing. Suffice it to say, it’s not looking good for the country right now.

Recession Woes

It’s not entirely shocking that productivity was down. After all, current statistics showed the gross domestic product (GDP) — the measure of all the economy’s goods and services — shrank two quarters in a row. In other countries, that would have automatically triggered a recession declaration, but not in America.

Inflation in July eased to 8.5%, down from the record 9.1% the month before. It’s still very high and hurting people when they purchase just about anything. In theory, if labor productivity increases, it could help this crisis too.

Not everything was bad news, though, as unemployment decreased slightly to 3.5%, the lowest it has been since February 2020. Of course, if the country is plunged into a recession, that would almost certainly creep up as investors stop putting money into the economy. For now, the best thing the American people can do is make sure their personal finances are in order and wait.

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