The red line is productivity, shown as percent change from year ago.
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| Graph #1: Household Debt & Debt Service (blue) and Productivity (red) |
The two lines don't always match, mostly because of the big spike in productivity that we typically get after recessions. But set those spikes aside, and the lines do at least hint at similarity.
The red oval mid-graph highlights productivity and debt conditions during the "Goldilocks years".
The red oval on the right shows debt conditions even lower now than during 1993-1995, so there is plenty of room for things to go up.
Productivity has been low since 2011, as the graph shows. But productivity was also low after debt conditions bottomed out in the early 1990s, just before the Goldilocks years.
Productivity is going to pick up soon.
4 comments:
Kind of a wuss conclusion there: "Productivity is going to pick up soon."
That's okay, come back tomorrow: I go from wuss to wacky. I'll give you dates and graphs for productivity improvement.
PS
Low debt service and growing debt means the economy is growing.
If we get improved productivity from that, it's probably Verdoorn's law.
But I don't know. (I just look at graphs.)
Better make that Saturday for the dates and graphs for productivity improvement.
At voxeu.org: Economic models vs ‘techno-optimism’: Predicting medium-term total factor productivity rates in the US.
Their conclusion: Overall, it is uncertain how long slow TFP growth will persist in the US. It does, however, seem clear that econometric estimates of trend TFP growth extracted from recent past performance should not be given much weight in projections of average TFP growth rates over the next 10 years.
There is room, they remind us, for productivity improvement.
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