Labor productivity growth since the Great Recession

From the fourth quarter of 2007 to the second quarter of 2009, the U.S. economy experienced its worst recession since the Great Depression of the 1930s, with nonfarm business output declining by $753 billion and some 8.1 million jobs lost. As a result, this most recent economic downturn is sometimes called the Great Recession. Although the economy has been expanding since the Great Recession ended, productivity growth has been relatively slow compared with other periods since 1947. From the fourth quarter of 2007 to the third quarter of 2016, labor productivity grew at an average annual rate of 1.1 percent, which is considerably lower than the average growth rate from 1947 to 2007 (2.3 percent) or the average rate from 2001 to 2007 (2.7 percent).

Through most of the Great Recession, labor productivity growth lagged behind historical growth rates. However, coming out of the recession and into the early quarters of the current expansion, productivity growth reached above-average gains. In the fourth quarter of 2009, productivity growth actually caught up to the long-term historical trend, although it was still slightly behind the trend from the previous business cycle. After 2010, productivity growth slowed and remained substantially below that of earlier periods.

These data are from the Labor Productivity and Costs program. For more information, see the Beyond the Numbers article “Below trend: the U.S. productivity slowdown since the Great Recession” by Shawn Sprague. Labor productivity is a measure of economic performance that compares output, or the amount of goods and services produced, with the number of hours worked to produce those goods and services. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked for all persons, including employees, proprietors, and unpaid family workers.