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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Jun 22 2015

Fed Projections Still Skewed by Productivity Hopes

Much hinges on the Fed’s belief that productivity growth will revert to its decades-old pace of around 2¼ % a year. When asked about the Fed’s improving labor market projections for next year, Fed Chair Janet Yellen responded that “productivity growth… affects the pace of improvement in the labor market… and…the pace of improvement in the labor market that we’re projecting reflects the notion that there’s likely to be some pickup in the pace of productivity growth.”
 
To understand the landscape of such a recovery in trend productivity growth, we expand on our earlier analysis by focusing on the cyclical behavior of productivity growth. This perspective is especially relevant at a time when clever smartphone applications have streamlined some aspects of our lives, creating an impression that the workforce is becoming more productive by the day. Unfortunately, this view does not matched reality.

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Shifting Patterns in Recessions and Recoveries

ECRI June 17, 2015

Slides and notes from Madrid Fund Forum Conference. More

 

Simple Math: ½% + ½% = 1%

ECRI June 11, 2015

With productivity growth and potential labor force growth both averaging ½% a year, trend real GDP growth is converging to 1% a year. More

 

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