State of the economy: The good, bad and the ugly

What can businesses make of the latest Labor Department numbers?

The good news: Worker productivity shot up 2.5% in the April-June quarter.

The bad: That jump looks better compared with the 4.5% drop in January-March, coupled with the nightmarish 2.1% contraction in GDP.

The good: Labor costs are up slightly (0.6%), which means workers are in greater demand.

The bad: The increase is anemic compared with strong economic periods over the past 30 years.

And the ugly: Over the past 12 months, productivity has increased 1.2%. That’s well below the long-run average, 2.2%.

‘We can’t find enough qualified candidates!’

Economists have a variety of opinions for the low productivity rate over the past five years.

Employers overwhelmingly cite the same reason: They can’t find enough qualified workers.

Not that companies aren’t hiring though. They are – adding an average of 244,000 jobs a month over the last six months. That’s the highest six-month hiring rate since 2006!

But companies are hiring less-qualified people at lower or stagnant wages. Thus the minor gain in productivity with wages staying the same.

What’s it all mean long-term? Your guess is as good as ours.

At the very least, interest rates won’t budge anytime soon knowing the Fed’s track record.

What’s your take on the economy? Leave a comment below.