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US Industrial production per worker continues its epochal upward trend

US Industrial production per worker continues its epochal upward trend

7/22/11 – MANUFACTURING OUTPUT HAS CLIMBED SINCE POST WWII – US industrial output per manufacturing worker has been going up for decades. Rather remarkably, a recent dip in productivity during the 2008 recession, popped back to where it was headed before the recession. This is in stark contrast to total non-farm employment which has so far failed to recover the trend line that ended in 2000. Yes, 2000, this is not a typo. (see our 7/5/11 entry).

In other words, the 2008 recession seems to have caused no lasting effect on manufacturing productivity increases. Regarding the question of jobs moving overseas, Fisher Investments claims that this is not only a U.S. tread but a worldwide trend as manufacturers around the world continue to be able to produce more per worker. They cite China as an example where they say that, “China has shed millions of manufacturing jobs since it began rapidly industrializing in the mid-1990s.”

Our graph below does identify some phenomena that need explaining though. While the rate of productivity growth has been about the same since WWII, it did slow briefly beginning in the late 70s before stabilizing at about the same growth rate. Then in the late 90s, the rate picked up steam and then stabilized on the historical trend line. This is all very curious and we will be looking for an explanation.

If you have read some of our other entries, you will notice a theme. We look for parameters which do not change over long periods of time. We do this because we think it points the way to where the underlying powerful economic forces lie, forces that governments are unlikely to be able to influence. Manufacturing productivity seems to be an example.

NOTE: The Y axis is not quite industrial production/output per worker. It is an industrial production index per manufacturing worker. See the Federal Reserve for data.

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