Yardeni University

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In 10 Charts

Productivity, Unit Labor Costs & Inflation

Figure 1

In the US, the growth rate of productivity has been 2.1% over time, accounting for 62% of real economic growth of 3.4% over time.

Figure 2

On a yearly percent change basis, unit labor costs, which is the ratio of hourly compensation to productivity is the major driver of the consumer price inflation rate.

Figure 3

Contrary to the Phillips Curve, tight labor markets (as measured by low unemployment rates) may not be inflationary if they stimulate productivity growth.

Figure 4

Productivity growth may be in the midst of its third boom since the 1960s.

Figure 5

In competitive labor markets, the growth in workers' real compensation is driven by productivity.

Figure 6

The so-called productivity-pay gap narrows significantly when hourly compensation is divided by the nonfarm business deflator rather than the CPI.

Figure 7

A useful monthly indicator of productivity is average hourly earnings divided by the personal consumption expenditures deflator.

Figure 8

Productivity has been rising much faster among goods-producing industries than services-providing ones.

Figure 9

Spending on productivity-enhancing technology accounts for an increasing share of capital spending.

Figure 10

Productivity is an important driver of corporate profit margins.