BLS Report: Productivity Increases 2.9% in Second Quarter…

Economic analysis can get weedy…. so a simple way to look at productivity is to think about baking bread in your kitchen.

If you were going to bake 4 loaves of bread it might take you 2 hrs start to finish. However, if you were going to bake 8 loaves of bread it would not take you twice as long because most of the tasks can be accomplished with simple increases in batch size, and only minor increases in labor time.  Your productivity measured in the last four loaves is higher.

Economic Productivity is measured much the same way, within what’s called a production probability equation.  Additionally, if two hours of your time are worth $40, each of four loaves of bread costs $10; but if you make 8 loaves in the same amount of time the labor cost is only $5/per loaf.

From 2007 through 2017 the average rate of productivity increase was 1.3%.  However, in the second quarter of 2018 productivity jumped to 2.9%.  That means total business output increased significantly as more product was demanded from within the business operation.  Throughout the economy people just wanted more stuff.

Improved gains in efficiency/productivity (more bread needed) supports faster economic growth without generating higher inflation; no need to raise prices because your cost to make each loaf of bread decreases the more you make.  Higher sales and lower per unit cost means more profit for the bread-maker.  No need to raise prices.  Without inflation, there’s no motive for the Fed to raise interest-rates.

Increases in productivity generally means the economy is generating more stuff.  The more stuff generated the higher the value of all economic activity; this increases GDP growth.

When we see higher productivity in direct alignment with GDP increases, the increased production indicates sustainable GDP growth.

BLS Report: “Nonfarm business sector labor productivity increased 2.9 percent during the second quarter of 2018, the U.S. Bureau of Labor Statistics reported today, as output increased 4.8 percent and hours worked increased 1.9 percent.” (link)

We made 4.8 percent more stuff, and only worked 1.9 percent longer.  The net is a 2.9 percent productivity increase.

.

Advertisements
This entry was posted in Donald Trump, Economy, media bias, President Trump, Trade Deal, Uncategorized, US Treasury, USA. Bookmark the permalink.

162 Responses to BLS Report: Productivity Increases 2.9% in Second Quarter…

  1. vikingmom says:

    But numbers are REALLY HARD and they’re confusing, so let’s just keep talking about our FEELINGS and stuff like that…and college is too expensive, and I deserve free health care, and, and, and besides Trump might have said mean things to someone once!

    Liked by 30 people

  2. fleporeblog says:

    I had to tell our Wilburine how much he is loved at CZtH!

    Liked by 41 people

  3. Turranos says:

    Whoa, that means that underneath the hood of this improving economy is a monster engine driving us to a much better future. Well take it!

    Liked by 9 people

    • Joemama says:

      Wait until the manufacturing job multiplier kicks in. Not an economist, but it is my understanding that the manufacturing job multiplier is much higher than that for service jobs.

      Like

      • Blue bongo says:

        Excellent point, a manufacturing economy has much more profit built in vs a service driven economy. In a hot economy many contracts are sole source, fixed price, to ensure that the proper good is delivered on-time in the quantity required. Commonly this results in an added “premium” in price, usually averaging 30%. As those contracts increase and accelerate in an even hotter economy more premiums add up very quickly. A manufacturing boom lasting a decade would multiply that growth exponentially.

        Like

  4. TwoLaine says:

    The recent article that President TRUMP tweeted about Hope & Change in an Alabama Coal Mine talked about how during the Obama years they did everything they could to keep everyone out of overtime. Now, it’s ba11s to the wall, bring on the overtime. 🙂

    The heavy cloud of ObamaUnCare has been lifted.

    Liked by 17 people

  5. Bill_M says:

    Time for another check ad yes, it is true. Still not tired of winning!

    Liked by 3 people

  6. fleporeblog says:

    More and more signs that we are on the cusp of bringing everything back into our country so that we don’t have to depend on imports!

    From the article linked above:

    U.S. Steel announced Thursday that it is investing $750 million to revitalize its flagship Gary plant to gear up for increased demand in the wake of President Donald Trump’s tariffs on imported steel.

    The company said the investment will make “significant upgrades” to increase efficiencies at the 110-year-old Northwest Indiana plant, which is U.S. Steel’s largest, employing 3,800 workers.

    Located on the southern shore of Lake Michigan, Gary Works is U.S. Steel’s largest manufacturing plant, with an annual raw steelmaking capability of 7.5 million net tons. The facility makes sheet products, strip mill plate in coils and tin products.

    “Today’s news is a major step forward that will have a lasting positive impact on the city of Gary, the northwest region and the state of Indiana for years to come,” Indiana Gov. Eric Holcomb said in the release.

    Liked by 18 people

    • fleporeblog says:

      In the meantime, another POS hits the unemployment line! You mess with Sarah Sanders or anyone else that works for our President, eventually you will be put out of work. Deplorables are the ones that pay your salary. They will never learn.

      Liked by 30 people

    • Robert Smith says:

      That single plant is roughly 10% of current US steel production.

      Liked by 2 people

    • Guillermo Maguire says:

      There is a lot of that all over the country. Fracking takes a lot of water, and there are tons of these trucks in the oil patches. Tough to get drivers for Home Depot etc to deliver lumber for house builders.

      Liked by 3 people

      • G. Combs says:

        HMMMmmm maybe I should dust off my CDL…

        Liked by 2 people

        • Ken says:

          I am in the oil service industry. Lack of drivers is my company’s single reason for turning down work right now. If you have a CDL and a clean drug and felony record for last 5 years, get to West Texas now!

          Liked by 2 people

        • Relieved Deplorable says:

          G Combs, if you have a CDL and a Rig, nows the time. As a freight broker if you aren’t getting $3/mile (or more) for <500 miles/day you’re doing it wrong. (Yes I know there are contracted and long haul rates closer to $2/mile)

          Like

    • Alison says:

      Holy #MAGA !!!!!!!

      Gary, IN used to be “the” industrial center at the tip of Lake Michigan. You could practically hear the heavy machinery pounding all the way from there to the car factories in River Rouge (Detroit) MI.

      To hear Gary is ramping up again is news I would never have dreamed could happen. I wonder if those steel families are even still there. What amazing times we’re living.

      Liked by 10 people

      • Suite. D says:

        Alison, I was a teenager in CA in my friend’s sporty convertible in 1962. Lots of cars on the 101 freeway. Moved to MI in 1963. The truck traffic on I-94 between Det. And Gary was frightening. And I’m not kidding! Smokestacks with fire and smoke in Chi, Hammond, Gary. A shot and a beer (boilermaker) at 8am at the end of the shift. Rough and tough. God blessed us with Trump. Muscle is back!!! MAGA!!!

        Liked by 3 people

        • Pa Hermit says:

          Ahhhh yeah, memories from a former USS worker in McKeesport! The way National Tube lit the sky up with that open hearth was special! Those were the days, eh?

          Liked by 1 person

      • big bad mike says:

        When I was a young salesman in the mid-80’s -US Steel Gary Works was my best account. I would spend at least 2 days a week there. Nothing is as awesome as a Steel Mill Complex that stretches for literally miles. And seeing those blast furnaces and rolling mills. Gary Works main gate had a reception.area where the salesman checked I and the head security guard was a soft spoken black man named Freddy. He made you sign in and would ask you the make and model of the car you were driving and then he would call your contact person and tell you to drive in. You had to drive your. Car inside the Mill because it was so big. If you weren’t driving an American Car.you weren’t getting in. Freddy would just tell the idiot salesman who was driving the foreign car that his contact couldn’t be reached. Remember, this is before cell phones and the reception area had no payphone. Only Freddy had a phone. Man, I loved that guy.

        Liked by 5 people

  7. Marica says:

    Thank you Sundance for that easy to follow economics lesson!! Bread analogy was great!!!
    Sundance = SuperHero!

    Liked by 18 people

    • Turranos says:

      Your even better than a Super Hero, Sundance!

      Liked by 1 person

    • WSB says:

      Don’t ya just love Sundance…and bread?!

      ❤️🌞💃➕🍞‼️‼️‼️

      Liked by 2 people

    • gatordad says:

      I’m fairly new to the site,probably about 6 months and I’m so impressed with Sundance. Is his identity secret and if so is there a reason? Grew up on DrudgeReport but have come to the conclusion that someone got to him because his links seem to have started to support the left’s narrative the majority of the time.

      Liked by 5 people

      • RedBallExpress says:

        Sort of a Clark Kent – able to bend steel with his bare hands, see through walls etc.
        Welcome aboard gatordad!

        Liked by 3 people

      • Welcome Gatordad! I felt the same way as you do now when I discovered this site. Mind blowing how much we’ve all learned. Sundances work is the best I’ve ever read! I have more time and my life back because of Sundances work. The posters here are top notch, funny, wise and have a lot of fun too.

        Someone was bashing Sundanc and outed Sundances name on twitter to me I read the tweet and blocked the guy. Never looked at it again and to this day can not remember what Sundances name was. I consciously hated that someone would do that out of anger, maybe revenge. It doesn’t matter in the long run.

        We are all so blessed to have CTH! Hope you stay and contribute posting your thought.

        Liked by 2 people

      • Peg_C the Deplorable says:

        A couple of years ago I noticed that 95% of Drudge’s links were going to Fake News and quit my addiction right then. Then he got peevish over PDJT and I felt quite vindcated. There’s other and better aggregators out there. At least a couple regularly feature prominent links to Sundance!

        Like

      • bkrg2 says:

        Welcome gator!
        Yes, Sundance prefers to keep his identity secret. This is for his protection. He has done amazing investigative work in politics and high profile shooting cases. So I am certain there are evil people that would like to silence him. I’ve been here since Summer 2016. He is an amazing person to (read his story of helping strangers during hurricanes last summer).
        What I can attest to is that Sundance is always correct with fact based interpretations and analysis, especially finance and economics. His opinions are about 99% spot on. And unlike almost everyone on the planet, he has changed his opinion on people when they demonstrate repeatable behavior (see Larry Kudlow post from yesterday as a good example).
        The posters here are the best. WAY better than any other site on the internet. Ad Rem does an incredible job monitoring posts.

        Liked by 1 person

      • He (assumption) chooses to be known as Sundance with no additional identifying information. Out of respect I will not question that decision. It’s not mine to make.

        Liked by 1 person

      • Suite. D says:

        I think you mean the Sludge. It’s a cheap tawdry tabloid now.

        Like

      • Nice source of latest at Freedom News Project:
        http://freedomnewsproject.com

        Like

      • wolfrom1 says:

        Gator. I think Sundance must have been cloned 100 times to do everything he does everyday. Absolutely amazing. Thank you Sundance.

        Like

  8. WSB says:

    Wowza!!!! Just WOWZA! Now, please bleed into NYS!!!!!

    Liked by 2 people

  9. Minnie says:

    Thank you, Sundance, for always breaking down your analysis for those of us with a wee bit of comprehension issues.

    I think I ❤️ you.

    Gratitude 🇺🇸

    Liked by 2 people

    • Peg_C the Deplorable says:

      I’ve always had an eyes-glazing-over issue re: economics. Part of it is psychological and part is educational. This was crystal clear! I used to learn a lot by listening to the newest Wolverine’s (Kudlow) radio show when I could. Kids don’t learn economics in school and parents don’t know how to teach what they don’t know! It’s all a sickening perpetuation of ignorance.

      Liked by 3 people

    • New Nonna Again!!! says:

      …And who bake. 🤗

      Like

    • Pa Hermit says:

      Bingo, Not everyone is a Harvard grad! Some are from the school of hard knocks, LOL.

      Liked by 1 person

  10. missilemom says:

    Thank you Sundance for giving us this simplification of a complex issue. Your trade article on oranges is still my favorite which I could actually explain to my 84 year old Mom. Bring on the Bread
    $$$.

    Liked by 4 people

  11. Dekester says:

    Blaine Washington, is just over the Can/U.S. border from us. It is a small border town that is just a hopping. Numerous small businesses have opened recently and appear to be doing a terrific business. Private postal outlets are numerous, and all seem to doing just fine.

    I crossed the border today at 0545 and even with the weak Canadian dollar,there were dozens of us in the border line up. Most were on the way to spend a fair bit of money South of the 49th.

    You guys are just killin’ it.

    God bless PDJT

    Liked by 22 people

  12. Mncpo(ret) says:

    The baking analogy is fabulous! I bake bread every week and can attest to Sundance’s work/product theory! What a cool way to explain economical theory. Easy to understand, comprehend and absorb. We are blessed to have him teach us. No groveling intended, I mean it.

    Liked by 9 people

  13. Amy2 says:

    Thank you for the analogy Mr. Sundance. I use a bread machine for the kneading (and a wheat grinder)–lazy, entitled bread eater that I am!

    Liked by 2 people

  14. Ditch Mitch says:

    Gotta love that “Al Capone” picture. I can tell Pence sees the symbolism.

    BTW, Tucker had a guest on tonight (don’t remember his name) that has studied Chinese economics and wrote a book on the subject. He said in his interviews of Chinese officials the Chinese said that PDJT is playing 3D chess with them and winning. “Chinese are being outflanked by PDJT.” Interesting interview. Gonna have to tape the 9pm PDT show.

    Liked by 5 people

  15. John says:

    I think businesses are also figuring out the JIT inventory system (taught in business schools for the last 30 yrs) sucks from a customer service and productivity point of view. I think you might see GDP at 4.5-5% this next quarter. I started a business right before financial crisis and built it throughout the Obama years but the energy changed with Trump. When Obama said he watched SportsCenter and ESPN everynight. Think about it, you become the leader of the free world for 8 years and you actually waste time watching SportsCenter every night. Couldn’t figure out something more productive to do with his time. What a waste. Trump keeps himself busy as there is unlimited stuff to work on. Hillary would be sleeping while padding her bank account.

    Liked by 4 people

    • Curry Worsham says:

      But I thought Trump sat in his bathrobe all day watching Fox News.
      I heard it on TV.

      Liked by 4 people

    • G. Combs says:

      As a QC engineer my opinion was ALWAYS the Just-In-Time inventory system SUCKED!

      What happens when some idiot mis-spells Trichloroethylene as Trichloroethane?
      WORSE, despite my pleading you do not do ALLOW me to do incoming inspection…

      Wave bye bye to several million dollars and a very good customer. That’s what happens!

      Liked by 5 people

      • John says:

        It does suck and it worked for the computer industry (DELL) for a while as computer processing was doubling every couple months. But it doesn’t apply to every business. Larger lots generally decrease variability and QC costs as well as shipping costs. Interest rates are very low too so the carrying cost is small and the customer is more satisfied. I needed Rodney Dangerfield to sit next to me during those business classes.

        Liked by 4 people

      • Pa Hermit says:

        I seem to recall that J I T was a Japan invention. In theory it works to good degree, but in reality it does leave a lot to be desired! A yuge loss if there’s any delay!

        Liked by 1 person

      • Rhoda R says:

        I used to buy things that go ‘boom’ for the AF. Al Gore wanted to institute JIT for the military.

        Like

    • Peg_C the Deplorable says:

      I know JIT has been a disaster in retail – a good example is Whole Foods after Bezos took it over. I read they were suffering from near-insurrections by store staffs under new, draconian quotas and impossible merchandising. (Before my IT career I was in merchandising.)

      As for Obama, there was a long piece in either Vanity Fair or Politico a few months ago that was a revelation to me. Obama would have dinner with Michelle and VJ every evening in the WH and then go off to play video games, get high, etc. Michelle and VJ at the dinner table would foment policy and the next day’s agenda. He carried it out. ‘Nuff said.

      As far as we know, VSGPDJT’s Energizer Bunny never quits and he works seemingly 20 hours a day. How the crazy trolls and Fake News think they’re convincing anyone the man isn’t a working machine accomplishing tons every day is beyond me.

      Liked by 3 people

    • Ditch Mitch says:

      Watching only at night, because he is golfing during the day.

      PDJT impressed me big time during the improptu presser before leaving Singapore. He looked tired and said he would take a nap before getting back to work as he had lots of work to do.

      Like

  16. G. Combs says:

    Another point.

    If you have a lot of demand you keep making the same thing for a longer period of time before shutting down, cleaning up and starting on the next product. Every time you switch products the down time costs money. Production managers LOVE LONG RUNS! 😁

    Us QC types do too because there is less bad product made once everything is humming along.

    Liked by 3 people

  17. GB Bari says:

    Good primer on productivity, Sundance. As a former Industrial Engineer, I concur wholeheartedly with this as a natural extension of your economics lessons.

    I cannot think of ANY journalists or MSM entities who ever bothered to break down basic macro economics for their general readership or viewership population. It works in their masters’ favor to keep as many voters as possible confused and vulnerable to propaganda.

    Liked by 5 people

    • TheWanderingStar says:

      The financial and economic journos would prefer you to believe that you need a “magic wand” a la [The name that must not be spoken] and a crystal ball.

      Liked by 2 people

    • G. Combs says:

      Ain’t it great to see someone actually explain these concepts in a manner most people can understand?

      I have learned more about a whole slew of subjects in the last ten years I have been on the net than I ever did in college.

      Liked by 1 person

    • Peg_C the Deplorable says:

      They also don’t understand it because they never studied it, much less did it. The Left don’t understand economies of scale or supply and demand, and to them everything is a zero sum game.

      Liked by 1 person

  18. Alison says:

    I swear you’re the best ‘splainer ever, Sundance.

    You’re *almost* as good as Mick Mulvaney 😘😘😘💖💖

    Liked by 3 people

    • G. Combs says:

      Sundance is certainly well up there but there are some other really great teachers out there too. That is why the very thought of CENSORSHIP makes me see RED!

      All this incredible talent, many of them retired scientist and engineers, put stuff up on the internet and some soy boys have the unmitigated gall to decide THEY are going to TELL us what we can and can not read ,hear and see? GRRRrrrrr 😡

      Like

    • Robert Smith says:

      Mulvaney’s been quiet lately. Must be big gov reorg plans being cooked up.

      Like

  19. NJF says:

    #WinningBigly

    Liked by 1 person

  20. L4grasshopper says:

    I will be shocked if the first revision to the recent 4.1% GDP number that comes out at the end of Aug isn’t up to 4.3% or better.

    Like

  21. I’ll predict that the MSM “experts” will start talking about INFLATION now that economic growth is in the 4% range.

    Liked by 1 person

  22. bkrg2 says:

    Technical question here – I looked on BLS website and a couple other places, but couldn’t get a clear answer. And its been almost 30 years since college…
    How does idle capacity impact the BLS measure?
    I’m thinking that many manufacturers had idle machines, production lines, factories, workers during the Obozo years. As MAGA is ramping up every day, this equipment will start running at 100%. Does this also increase the BLS measure?

    Like

    • big bad mike says:

      If everyone is busy in Manufacturing, you’re not making money. The goal is to ship finished product, not build inventory just to stay busy. The key to any manufacturer’s success is their backlog of sales. When people are buying things made here in the USA, a boom economy just happens. Been over 30 years since it’s been this good.

      Liked by 1 person

  23. mr.piddles says:

    “a simple way to look at productivity is to think about baking bread in your kitchen”

    This right here is why I love CTH. That one line says it all.

    Liked by 1 person

  24. treehouseron says:

    I own a retail store and our ‘productivity’ can increase almost exponentally. We could probably sell 20 times what we’re selling right now, if the customers were purchasing non stop… and we could probably do it with the same employees we already have. Every retail store in the country is likely in a similar position, pretty wild.

    Liked by 3 people

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s