Productivity Revisions Not Over

Back in March, I analyzed  the productivity ‘surge’ of 2007-2009  and declared it “highly suspect.”  (It was perhaps one of the longest blog posts ever).

Well, yes.  As I predicted five months ago, reality has won, and productivity growth has been revised down. This morning’s productivity release revised down nonfarm productivity growth in the 2007-2009 period from   2.3% to 1.5%.

But I don’t think the productivity revisions are over.   The published GDP stats, once you look under the hood, still tell a highly implausible story.  Once I do the appropriate adjustments,  the economic narrative changes:

*The bad news is that the U.S. economy is worse off than it looks, even now.

* The ‘not-so-bad news’, at least for Americans,  is that the next round of the financial crisis is likely to hit the rest of the world harder than the U.S. , even if the government does nothing.

To be continued.


  1. Why is the next round of financial crisis likely to hit the ROW harder than the US?

  2. Is it essentially a story of operating leverage, with the ROW being highly levered to the US consumer?

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