American Workers Are the Economy’s True Unsung Heroes

The US economy just enjoyed its strongest quarterly growth outside of the pandemic era since 2014, expanding at a 4.9% annualized rate in the three months ended Sept. 30. The economy’s resilience has continually frustrated the gloom and doomers, who have been predicting an imminent recession for more than a year now.

Still, even the optimists are bound to wonder how much longer a downturn can be avoided at a time of elevated consumer prices, benchmark interest rates at their highest level in a generation and soaring credit-card debt. The answer just might be longer — much longer.

The reason may be due to labor productivity, which grew last quarter by a very rapid 3.7% on an annualized basis. This quarter, it could come in as high as 4.4%, based on the trends in the gross domestic product report. Performance like that would be welcome at any time, but at this moment it’s helping to offset the stiff headwinds facing the economy. (The government said today that overall productivity rose at a 4.7% annualized rate in the third quarter, the highest outside of the pandemic era since the end of 2009.)

Working Smarter

Rising labor productivity means the economy can create more stuff with the same number of workers, working the same number of hours. That’s crucial because getting inflation back under control requires either businesses to increase the supply of goods and services or consumers to decrease their demand.