Noted economist and Nobel laureate Paul Krugman on Thursday took stock of one specific data point to illustrate economic momentum.
Preliminary second-quarter productivity report released by the Bureau of Labor Statistics Thursday showed a 3.7% quarter-over-quarter increase in non-farm productivity. This marked the fastest pace of increase since the third quarter of 2020 and compares to a revised 1.2% decline in the first quarter.
The increase came about as output increased by 2.4% even as hours worked fell by 1.3%.
Krugman shared a chart showing the improvement in the metric and said, “The post-pandemic productivity slowdown (which may or may not have been real) is over.”
Unit labor costs are now consistent with the disinflation story, he added.
And unit labor costs are now consistent with the disinflation story 2/ pic.twitter.com/ju98pAL35b
— Paul Krugman (@paulkrugman) August 3, 2023
Second-quarter preliminary estimates showed unit labor cost rising 1.6% quarter-over-quarter and 2.4% year-over-year.
“‘Quiet quitting’ is (quietly) biting the dust,” Krugman said.
Quiet quitting refers to a recent trend seen in the workplace where employees do the minimum requirements that are demanded of them and put in no additional time or effort.
A Gallup poll conducted in Sept. 2022 found that at least half of the U.S. workforce is quiet quitting, with the trend found more prevalent among young workers.
With the second-quarter data supporting a more engaged workforce, it is likely the trend is reversing.
Despite the multiple risks, the economy has been alive and kicking, going by a slew of recent economic indicators.
The advance GDP estimate released in July showed that the economy grew at a fairly strong clip of 2.4%. Pricing pressure has eased, with consumer price inflation slowing notably since the highs seen last summer.
Krugman recently said in a New York Times op-ed that Bidenomics — a term used to refer to President Joe Biden’s economic policy — is working.
“It would be too much to argue that Biden’s economic policy was pure Goldilocks, that they set the economic temperature just right,” he said.
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