Wells Capital Management's chief investment strategist, Jim Paulsen, on Friday said he has a simple explanation for why U.S. productivity is lagging while other economic measures rise.
The data is being misstated, he says.
Such a claim is not unprecedented. Former Federal Reserve Chairman Alan Greenspan famously questioned whether productivity was accurately reflecting output in the mid-1990s when the country was in the midst of a technology revolution.
The Labor Department on Tuesday reported U.S. nonfarm productivity — or hourly output per worker — unexpectedly fell in the second quarter, dropping at a 0.5 percent annual rate compared with expectations for a 0.4 percent rise. The report marked the third straight quarterly decline in productivity.
Paulsen said he believes something is amiss because today's productivity data is out of sync with the long-term historical trend.
Throughout the post-World War II era, productivity grew faster than normal when real wages also exceeded average growth, at least until the economic recovery that began in 2009, Paulsen said. But throughout the seven-year recovery, real wages have grown above average, while productivity has lagged the historical average.