In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest data on labor productivity.
- U.S. worker productivity rose in the latest data. It rose 1.9 percent on an annualized basis, but the latest gain is coming after the declines in the prior quarters. From one year ago, productivity barely changed, rising by only 0.1 percent.
- Productivity is a very important gauge of long-term prosperity. The rapid productivity gains on a consistent basis as happened during the Industrial Revolution in the 1800s in Britain and during the post-War period in the U.S. in the 1950s assured that the younger generation will be living much better than their parents. In countries like South Korea where productivity increases have been very fast along with the expansion of schooling, the current working generation is earning about 5 times more than their grandparents.
- It seems more Americans are beginning to doubt whether such prosperity can be passed on to the next generation. However, productivity data still points to about 1 to 2 percent annual productivity gains in America. In the last 10 years, from 2003 to 2013, productivity has advanced by 1.9 percent annually. That means the real income (purchasing power after adjusting for inflation) of a typical American should double in about 40 years.