U.S. PRODUCTIVITY PLUNGES IN 4Q
U.S. productivity in the October-December quarter fell by the largest amount in 39 years as the coronavirus pandemic roiled the labor market.
Productivity dropped at a rate of 4.8% in the fourth quarter after having risen strongly in the two previous quarters, the Labor Department reported Thursday. The decline was the biggest quarterly setback since a 5.1% rate of decline in the second quarter of 1981.
Labor costs rose at an annual rate of 6.8% in the fourth quarter after having fallen at a 7% rate in the third quarter.
Productivity, the amount of work per hour of output, has produced some major swings since the pandemic hit early last year and pushed the country into a recession.
After falling 0.3% in the first quarter, productivity shot up at a 10.6% rate in the second quarter as millions of people lost their jobs. With employment falling faster than output, productivity increased.
Lydia Boussour, lead U.S. economist at Oxford Economics, said she expected productivity growth to rebound in the coming months as the economy gets a boost from the rollout of vaccines and another sizeable fiscal stimulus package which President Joe
Biden is lobbying to get Congress to approve.