March 5, 2010

WHICH IS CALLED DEFLATION:

Workers fewer but more productive in '09 (David M. Dickson, 3/05/10, Washington Times)

According to government data for the second half of 2009 released Thursday, American workers produced considerably more per hour for notably less hourly compensation - a combination likely to generate a big jump in corporate profits.

Productivity, or output per hour, strongly increased, at annual rates of 7.8 percent in the third quarter and 6.9 percent in the fourth quarter, the Labor Department reported Thursday. For all of 2009, productivity surged 5.8 percent, its biggest four-quarter increase in more than seven years.

However hourly compensation, adjusted for inflation, plunged at annual rates of 3.8 percent during the July-September period and 2.8 percent during the October-December quarter.

The combination of soaring productivity and plunging compensation contributed to plummeting unit labor costs, which dropped by 7.6 percent in the third quarter and 5.9 percent in the fourth.

Posted by Orrin Judd at March 5, 2010 7:01 AM
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