The Good News: Worker Productivity and Profits Per Workers Are At Record Highs. The Bad News: That Probably Means A Record Jobless Recovery
The top chart above shows that real GDP in the fourth quarter of 2010 was slightly higher (by 0.14%) than real output in the fourth quarter of 2007 when the recession started. But even though the economy has made a complete recovery from the Great Recession in terms of real economic output, the U.S. economy is producing more real GDP today than in 2007 with 7.3 million fewer private sector jobs. This current economic recovery is an amazing story of huge increases in worker productivity (producing more output today with 6.3% fewer private sector workers than in 2007) that might be unprecedented in U.S. history over any three year period of time, or in any post-recession period.
What does that surge in worker productivity mean for the bottom lines of American companies? The bottom chart above shows that real corporate profits per private sector job reached an all-time record historical high of $11,552 in the fourth quarter of 2010 (measured in 2010 dollars). That's 65% higher than the recession-low of about $7,000 per worker in fourth quarter of 2008 and 7.5% above the pre-recession high of $10,740 in 2006.
That's the good news about record-high worker productivity and the resulting record-high real corporate profits per private sector worker. The bad news is that these trends might translate into a record-length "jobless recovery," as U.S. companies have been able to expand output and profits to record levels, but with millions and millions of fewer workers. Taken together, these two trends might explain why many companies have been reluctant to hire back more workers - why increase the labor force when output and profits are at record-levels?
A recent AP news report discusses these trends: