U.S. productivity rises at fastest pace in six years So what. Over the past decade productivity gains have NOT been accompanied by higher real wages and living standards – a first in US history.
Long-time readers know our crusade to debunk the ‘Great US Productivity’ miracle, which rests on faulty, if not fraudulent US economic data that understates inflation, which overstates production (GDP)
Years ago (Sept. 2003 IWRC), Sen. Robert Bennett (R-UT), a former banker, told CNBC that when Easy Al saw that productivity numbers were not showing bigger gains, the worst Fed CEO in history went to the BLS and told them ‘this cannot be true!’ Bennett added, ‘and do you know what, when the BLS reworked the numbers they found huge productivity gains.’
We literally jumped out of our chair when the naive senator unintentionally suggested that Easy Al had the BLS cook the books so Al could keep pumping credit and paper over declining US living standards due to the massive transfer of wealth abroad.
We elaborated on Bennett’s unintended expose in our ensuing missive. A day or two later we got a call from a West Coast Democratic Senator’s chief of financial affairs.
Productivity is defined by the BLS as ‘output per hour of all persons in the nonfarm business sector.’
The BLS reports that hours worked plunged at a 7.6 percent rate in the second quarter and unit labor costs declined 5.8 percent, the biggest decline since the second quarter of 2000.
By understating inflation and overstating GDP/output, productivity soars when hours worked plunges.
And didn’t we just learn that GDP had been overstated the past few years?
Yesterday afternoon rumors spread that the BLS had reported an erroneous productivity report. The BLS website: The Productivity and Costs: Second Quarter 2009 Preliminary news release issued on the morning of Tuesday, August 11, 2009, contains errors in Tables 1 through 5 and Appendix tables 1 and 2. The series containing the errors are compensation per hour, real compensation per hour, unit labor costs, and unit non-labor payments. A corrected version of this release will be posted as soon as possible.
Unfortunately most of the marketplace makes decisions based on US government economic statistics. And those that understand this folly must go along f- or awhile. But one must be alert when non-government data usurps fallacious government data; because when the inevitable readjustment to reality occurs, mucho dinero is lost.
And then most of the marketplace brays, ‘no one could have seen the biggest financial and economic collapse since The Great Depression coming.’