U.S. Productivity Drops the MOST SINCE 1947, Driving Up Labor Costs

Posted on 05/05/2022

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U.S. worker productivity fell at its steepest pace since 1947 in the first quarter of 2022. Non-farm productivity measures hourly output per worker. Non-farm productivity plummeted at a 7.5% annualized rate last quarter, the deepest since the third quarter of 1947, according to the U.S. Bureau of Labor Statistics. Data for the fourth quarter was revised slightly lower to show productivity growing at a 6.3% rate instead of the previously reported 6.6% pace.

The growth in unit labor costs accelerated, which tells a story of rising wage pressures that will continue contributing to keeping inflation elevated. Unit labor costs sprouted to 11.6%, bringing the increase over the past four quarters to 7.2%, the largest gain since the third quarter of 1982.