Listening to the White House talk about jobs would lead you to think everything is rosy in the economy. Yes, there is a lot of hiring going on. Sure people are going back to work now that we are officially past the pandemic. Some part of the hiring is still rehiring as opposed to new job creation.
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But there is a deeper issue.
Productivity growth is down. The Bureau of Labor Statistics is reporting the productivity of American workers decreased by a revised 2.1% annual rate in Q1 2023 versus Q4 2022. Productivity was down 0.8% in the first quarter from a year earlier.
The important point here is: This marked the fifth consecutive quarter of negative year-over-year productivity growth. That is the longest streak of declining productivity since records began in 1948. And why do you care?
In the US, GDP per hour worked is set to fall −0.7% in 2023 after declining −1.1% last year. Declining productivity means we are putting out a smaller amount of goods and services per hour worked. Putting out a smaller amount of goods and services per hour worked means the price of those goods and services will rise.
Now, add to declining productivity the effects of increasing the number of dollars in the money supply. The money supply is up about 650% since 2008. Can you feel the pressure from the rise in inflation?
According to Statistica, U.S. GDP was $14.4742 trillion in 2007 and $25.4613 trillion in 2022. If the money supply went up 650% and GDP, the goods and services in the economy, went up 75%: Where did the rest of the money go?
The White House wants you to think all is well, but somebody is playing with the numbers.
