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By Talmon Joseph Smith
Productivity grew at an annual rate of 2. 3% in the second quarter, the United States Bureau of Labor Statistics reported on Thursday, beating economists’ expectations. This recovery is a significant improvement from the slow rate of 0. 4% recorded in the first quarter. Year-over-year, productivity increased by as much as 2. 7 percent, which exceeds pre-pandemic averages.
A highly productive economy means that businesses and employees run successfully and earn more money in fewer hours. In the second quarter, production increased 3. 3 percent, while hours worked increased 1 percent.
On a less technical level, productivity is explained through the old axiom “do more with less” or the popular hallmark of “getting value for your money. “
Economists tend to breathe a sigh of relief when they see productivity gains, because they offer win-win prospects for staff, customers, and business owners: if corporations can make more money with fewer working hours, then, according to fundamental economic logic: they can be assumed to make more money per hour, while reinvesting and giving raises to staff, without sacrificing profits.
Being able to do more with less (or with the same amount of hard work and machinery) also means that corporations may not feel as pressured to set higher costs to generate profits. This is also good news after an era of inflation that has lasted for years.
Productivity, at a fundamental level, is calculated as a ratio: the total amount of output an economy produces commensurate with the hours worked by its intensive workforce. But the production side of the equation is adjusted quarterly for inflation. This can cause volatility, in either direction.
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