One of the obvious implications is that the stimulus spending is far from having the impact promised by the administration back in February. It is also a rather burning indictment of Christina Romer’s ability to predict job-creation numbers. Remember that the statement about unemployment reaching 8.8 percent next year without the stimulus?
Here is something intriguing: According to this piece in yesterday’s New York Times, worker productivity in the U.S. has surged in the third quarter:
In the first report, the Labor Department says productivity, the amount of output per hour of work, was rising at an annual rate of 9.5 percent in the third quarter, much better than the 6.4 percent gain economists had expected. Unit labor costs fell at a 5.2 percent rate.
Usually, a productivity surge is the sign of looming recovery. In this case, it isn’t. Are we about to become like Europe, where many economies have high productivity and high unemployment? Or are we entering a lost decade, as the Japanese did in the 1990s?