Last year, the growth of labour productivity was the highest in nearly 10 years, which gives reason to increase wages and hopes for further economic development.
The indicator of hour volume of produced goods and rendered services in the first quarter of 2019, compared to the fourth quarter of 2018, has increased by 3.6 per cent taking into account seasonal factors, but year — by 2.4%. Nothing similar was observed with the third quarter of 2010, when the economy began to recover from the effects of the recession.
In fact, after the recessions of the active growth should not be surprising, but this occurs much less frequently after a few years of recovery. Now we can assume that played a role as the use of improved technologies and increase in the number of employees. However, to rejoice on this occasion, not because the size of the gross domestic product in I quarter has increased by 3.2 per cent overall in 2019, according to the Federal reserve, will increase only 2.1%, and in the future may become even less pronounced.
As suggested by the economist Blerina Uruci from Barklays Bank, the main reason while we can assume a catalytic effect that has lower tax rates and increase government spending. However, over time it will become not so important and it is possible that this negative impact on productivity. Besides its annual rise and currently almost coincides with the average value after the Second world war to 2018, inclusive, amounting to 2.1% (including periods as recessions and growth). Significantly higher — 2.7 per cent — it was only from 2020 to 2007, when the economy was also on the rise.
Anyway, the increase in labor productivity may be the main factor due to which the White house will reach its goal of increasing GDP by 3% per year. This is especially true in a situation when due to low unemployment, the company has faced shortage of takers create jobs. To attract them, and to encourage existing staff, we have to raise the payment, but, fortunately, the increased costs of labor are accompanied by increased profits. Besides, companies get a reason for long-term savings through investment in technology. So their real wage costs increased only 0.1%, which is insufficient for the “unwinding” of inflation.
It is worth noting that labour productivity started to grow in 2016, when Barack Obama, so Donald Trump has managed only to maintain this trend. It is planned that the reduction in the tax rates made at the end of 2017, will result in an increase in business investment in technology and equipment needed to further improve productivity. But, it seems that only now companies have begun to invest more, particularly in manufacturing automation.