Would an economic metric that looks at GDP per employee be useful to guage the economy? What clues could it provide on the health of the economy?
The St. Louis Fed posted in part:
The main concern using GDP per employee is that GDP includes spending from government transfer payments - and generally those recieving transfer payments are not employed. Transfer payment year-over-year rate of growth is currently 4.0% but the rate of growth spiked to over 30% during the Great Recession. This is a significant reason why GDP per capita looks worse than GDP per employee during recessions.
Using a twist on the St. Louis Fed's metric, the graph below displays the year-over-year rate of growth of GDP per employed population - red line) vs. GDP per capita (blue line)
The above graph suggests productivity growth is roughly 0.9% per year. This analysis also suggests for the last two years, the health of the economy has been improving.
Other Economic News this Week:
The Econintersect Economic Index for August 2018 improvement cycle continues and remains well into territory associated with normal expansions. Our index is now at the highest level since December 2014. There are continuing warning signs of consumer over-consumption.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
