The productivity of American workers had the fastest decline in almost 75 years

Why did labor productivity drop in the US? 1:39 San Francisco (CNN Business) — US labor productivity fell 7.5% in the first quarter of 2022, the largest decline in workers’ hourly output since 1947, according to data from the Department of Labor published this Thursday.
The report also showed unit labor costs, or how much workers are paid per unit of output, rose 11.6% during the quarter. This reflects a 3.2% increase in hourly pay and a 7.5% decline in productivity. Analysts surveyed by Refinitiv had forecast a 5.4% decline in productivity and a 9.9% rise in labor costs. Thursday’s data underscores the strength of the labor market, where competition for workers has pushed up wages as companies try to attract and retain talent. In March, job offers and layoffs reached record highs with 11.5 and 4.5 million, respectively. At the same time, supply chain issues, the pandemic and the Russian invasion of Ukraine have all contributed to rising inflation, which the Federal Reserve is trying to curb by raising interest rates. On Wednesday, the Fed said it would raise its benchmark interest rate by half a percentage point. The US economy shrank last quarter for the first time since 2020, in a sharp reversal of the previous year’s robust economic growth, according to the latest GDP data. That decline was closely related to supply chain issues that dented inventories and trade data, said Dana Peterson, chief economist at The Conference Board. “When you put all that aside, the US economy is growing in a healthy way,” he said. — This is a developing story. Anneken Tappe contributed to this report.