Unlike the Wall Street Journal, the NYT still has not noticed the productivity slowdown of the last three years. When the revised first quarter data were reported yesterday, the paper described the 1.0 percent annual rate as "in part a statistical aberration because of stagnant growth during the winter." For the year, productivity growth was 2.1 percent in 2005 and 1.6 percent in 2006, so it's hard to describe a 1.0 percent rate for a single quarter as an aberration. The quarterly data are highly erratic, so no one should expect productivity growth to stay this slow, but this rate is certainly close to the average over the last three years. (As noted in earlier posts, recent growth is likely to be revised upward, if job growth is revised down, as I expect.) This article also commits the sin of referring to multiplies of small numbers, telling readers that in the revised data "labor costs rose three times faster than first calculated." The increase was from an initially reported 0.6 percent rate of growth to a revised 1.8 percent rate. While the revised rate is three times the originally reported rate, it would be more informative to tell readers that the rate increased by 1.2 percentage points from the initially reported rate. After all, the tenfold increase from 0.1 percent to 1.0 percent really is not that scary.
--Dean Baker