By Denny Gulino
WASHINGTON (MaceNews) – A tantalizingly large jump in productivity growth reported Wednesday served more to illustrate its long-term path of weakness than promise more of the same for a productivity-starved U.S. economy.
The quarterly increase of a 2.9% growth rate was the product of the second-quarter surge in economic growth, the 4.1% jump in GDP, that very few forecasters expect to be repeated to that degree any time soon. Even that surge lifted four-quarter productivity growth to only 1.3%, part of a pattern of anemic annual results since the mid-2000s.
Yet the measure, important to any long-term prosperity, was the biggest good-news surprise among an array of data that taken together still failed to encourage Wednesday’s major stock market indices.
Retail sales for July also exceeded expectations, rising 0.5% while the gain excluding autos was even larger, 0.6%. June’s increase was pared back in revision, tempering the latest month’s advance.
Within the productivity figures was an unwelcome a 0.2% drop in manufacturing over four quarters. That result had been prefigured in the Labor Department’s in-depth report on multi-factor manufacturing productivity released last month, showing a dozen years of slippage.
In the background of concerns for investors is the recurring fear of both short-term and long-term negatives that chronically intrude despite healthy corporate earnings and consumption measures. They include sagging U.S. tax revenues that are the flip side of temporary economic stimulus embodied in the latest tax cuts and other congressionally authorized dissaving, depicted in a generally gloomy forecast update in recent days by the non-partisan Congressional Budget Office.
Other concerns include what many analysts have called an inchoate U.S trade policy aimed at punishing allies, trading partners and competitors alike and a dollar riding a wave of strength more than a year in the making, pinching emerging market economies like Mexico and Indonesia and helping push the Turkish lira toward crisis lows.
The Dow industrials. The Nasdaq composite, S&P 500 and the Russell 2000 pared losses late in Wednesday’s session that had been from 1% to 1.5% in the red.