Slump in productivity growth is the no.1 economic problem

Ignore the 1.3% annualised rebound in non-farm productivity in the second quarter, which barely reversed the 1.1% decline in the first quarter. The bigger story is the almost unprecedented weakness of productivity, not just since the recession but going all the way back to 2004 when the IT-related boost faded. Productivity increased by only 0.3% over the past 12 months and, following the incorporation of the recently revised GDP figures, the average annualised gain in productivity over the past five years was revised down to a pitiful 0.5%.