Productivity's Worst streak in four decades ... WHY?
Most mainstream economists don't have a good explanation. In recent testimony before Congress, Fed head Janet Yellen lamented that productivity growth has been "very, very low." She called it a "depressing finding." We don't disagree.
Here's our explanation: Jobs growth slows => Number of Hours Worked falling => Productivity slips => GPD dips.
1. Jobs Growth
Year-over-year nonfarm payroll growth has declined from its February 2015 peak of 2.3% down to 1.7% today
2. Aggregate Weekly Hours
Private sector year-over-year has declined from its 2015 peak around 3.5% to 1.05% today
See chart above. 40-year low. Not good.
U.S. economic growth has slowed from 3.3% (March 2015) to 1.2% reported in June 2016
Hedgeye CEO Keith McCullough lays out this cascading domino effect in greater detail in the 3-minute video below.
Want more? For an in-depth discussion of the productivity slowdown, see Hedgeye Demography Sector Head Neil Howe's piece "The Great Productivity Slowdown.")