What Happened To Productivity?

Inflation is running rampant and no one in DC will do a goddamn thing about it…..the latest numbers tell the tale…..

The consumer price index for June is worse than expected—and what was expected was bad. The CPI was up 9.1% year-over-year in June, above economists’ prediction of 8.8%. Even that estimate was worse than May’s 8.6%. The last time inflation was this high was in November 1981, reports MarketWatch. The so-called core CPI, which takes volatile food and energy prices out of the equation, was up 5.9%, slightly higher than the 5.7% estimate. The AP observes the reports “likely seal[s] the case for another large interest rate hike by the Federal Reserve, with higher borrowing costs to follow.” Dow futures were down 300 points on the news.

“A higher inflation rate … will put more pressure on the Fed to increase the interest rate more than expected, and that increases the possibility that the US is going to enter a recession,” University of Cincinnati economist Hernan Moscoso Boedo told ABC News prior to the CPI data being released.

The Wall Street Journal reports gasoline prices surged more than other categories, with an 11.2% gain over May. Some economists are hoping we’re at or near an inflation peak: Gas prices, for instance, were at $5 a gallon in mid-June but were down to a $4.66 nationwide average Tuesday—”still far higher than a year ago but a drop that could help slow inflation for July and possibly August,” per the AP.

They say (whoever the Hell ‘they’ are) that productivity is a better indication of the health of an economy than jobs (which is the focus of any economic report)….

We all are suffering from the creeping inflation that is plaguing this country…..and the best our government can do is try to protect profits for the oligarchs that control everything.I suggested that Biden consider price controls to give our citizens a break from the crushing inflation…..I was scolded for such a idea because it would make our national productivity suffer…..and yet without this ‘control’ it is already down…..

June’s employment report surprised most analysts, as US businesses added 372,000 jobs, way above expectations. The strong numbers dampened talk of impending recession, but what do they say about the strength of the economy overall? By themselves, they don’t really say much, according to New York Timeseconomics columnist Peter Coy. To get a truer sense of what’s happening—and what the future may hold—Coy says to pay attention to productivity, defined by the BLS as output per hour worked. That number shrank in the first quarter at a surprising 7.3% annual rate and is “on track for one of its worst 12-month performances” since 1947, Coy writes. That means GDP isn’t growing despite strong hiring.

The pandemic has a lot to do with it, but not for reasons most people might have expected in 2020. Back then, the economy experienced a productivity surge, which many analysts chalked up to deployment of new technologies to accommodate a homebound workforce. But it turns out 2020’s labor output was skewed by a change in the mix of workers, as lower-skilled, lower-paid workers were laid off but skilled workers remained.

Low-skilled workers are in high demand now, forcing companies to hire “less productive workers that in normal circumstances would not be active,” and output is inevitably falling as a result. Increased hiring and decreased productivity tend to signal that “businesses’ costs are rising and profits are getting squeezed,” and that scenario tends to end with layoffs.

Read the whole column here.

Lots of excuses of why this is……excuses does not help the situation…..many blame the output of the workers….why?  Workers only produce what they are told to produce…..

I still think that some sort of price controls would help me and my fellow Americans that are struggling with the situation these days.

I Read, I Write, You Know

“lego ergo scribo”

16 thoughts on “What Happened To Productivity?

  1. Inflation is hitting hard here. I went grocery shopping on Monday, and every single item had increased in price since last week. Our bill for two people and Ollie for one week (no luxuries) came to £109. ($130)
    Best wishes, Pete.

  2. First of all, “In Germany, Prices rose to absurd sums: at the end of the period of hyper-inflation, in the fall of 1923, a loaf of bread cost many billions and to send a single postcard from Munich to Prague required stamps worth 36 billion marks. This was before Hitler.

    I am assuming that America’s current rate of inflation will not reach that horrible plateau suffered by the Germans at the time, but I am sure the Radical GOP will use the inflation as an excuse to install their own fascist govrnment in 2024 … and by that time things will be so bad, most of the people here in America will be ready and willing to go along with loss of their democratic way of life seeing the prospects of the First American Reich as welcome deliverance.

    1. They will use the inflation rate as a tool in 2022 but we will have to see happens in the next 2 years…..but you is a good sound prediction. chuq

  3. Except for the fact that they don’t work, price controls is a great idea! Except for the fact it does not work — and is a form of theft — Socialism is a great idea!

    The problem should be obvious to you. The fact it is not should alarm you.

    Consider. Prices are set according to supply and demand. That is basic economics, and no amount of bureaucratic meddling can change that fact. Money itself is a commodity. Because the government has spent and printed large amounts of money, the supply of money has radically increased relative to the amount of goods and services. That is inflation, and it means our currency is worth less (in danger of becoming worthless). Therefore, anyone who wants to sell a good or service that is in demand is increasing their price.

    What will happen if government institutes price controls. Are people going to give away goods and services for less than they are worth? Are people going to sell at a price that does not cover their costs? Have you ever heard of the black market? Smuggling? Places like the former USSR and Venezuela? Of course you have. This is not rocket science.

    What is the government’s appropriate role in the economy? We have regulators to protect our property rights and to help keep the transactions we make with each other honest. In addition, when people become incompetent to manage business transactions one their own, we use government to establish guardianships. What you are demanding is that we declare the entire population incompetent. That is BS!

    1. That is an excuse….if you want to eat and still have enough money to shelter and such then something needs doing…..regulations have done nothing to protect the consumer…..that is who needs the protection not corporations. chuq

      1. That is not an answer. That is an excuse for an answer. You have not addressed the root problem. Price controls won’t work, not when prices reflect the value of money. Price controls don’t deal with the root problem. Inflation means money is worth less, and price controls ignore that problem.

        We have a fiat currency. The value of our currency comes from the fact that our government requires that we pay our taxes in dollars. If our government spends a bunch of money and the Fed monetizes the debt by printing a bunch of money, that leads to an increase in the money supply and inflation. Price controls don’t stop inflation. Price controls, if effectively implemented, will just stop production, and it is foolish to believe otherwise. Price controls will just make the problem worse.

        The answer is to encourage production, especially the production of energy, and to stop government spending money we don’t have.

      2. Instead of dealing with the issue, you have created a straw man. Then you have disagreed with it. Thus, your disagreement doesn’t make any sense.

  4. Inflations happens when the goverment spends an insane amount of printed money.

    As for the high energy prices. In addition to the effect of printed money the supply of energy is inentionally kept low.
    Prior to the pandemic global oil production was 83 to 84 million barrels per day. Today it is about 80 million. US oil production alone has fallen by 2.2 million barrels per day. These are the reasons for high fuel prices and not the Ukraine war or Putin.

    Price controls have naver worked and they will never work.
    The goverment can force oil companes to sell at a maximum price of X but that still wouldn’t create one additonal drop of oil.

      1. Correct. the goverment is manipulating the market.
        Imagine, if you will, that you are the CEO of an oil company.
        The year is 2020, you are selling oil at a reasonable price and you are still making a good profit. A virus hits your country and the goverment imposes absolutely stupid draconian lockdowns which bring GDP down and crash demand for oil. The lockdowns go on and on and you have to lay off employees and close some oil rigs. You are losing a lot of money. Then you have an election campaign in which the top candidate promises to “build back better” and to eliminate fossile fuels. Said candidate becomes president and makes good on his promise to eliminate fossile fuels gradually and step by step for more than a year. The president’s policies have the desired effect and oil production is down. Oil prices skyrocket and the president tells you to produce more oil because inflation and high gas prices hurt him in the polls. At the same time his goverment is telling you that they want only a temporary increase in oil production and that the goal of ultimately ending oil production remains. In addition to that some people are toying again with the idea of imposing lockdowns (not only in the US) and the president’s party won’t guarantee that there won’t be lockdowns anymore. In order to increase production you have to invest a ton of money. You have to hire employees, buy equipment, possibly take loans etc. but knowing that there will be no lonterm future for oil and that there is not even a shortterm security you should invest why? You should increase production why? You have to answer to your shareholders when you make such decisions and if I were a shareholder there is no way in hell that I would agree with such investments.
        I would tell to the CEO that he should politely but firmly tell the president: FU.

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