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IHS chief economist Nariman Behravesh on the drop in U.S. productivity and bright spots in the economy.
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Here's a business alert and our economy with US productivity falling at a 2% rate the fourth quarter two biggest drop we've seen a couple of years but our next guest says.
There's a silver lining to all of this -- and -- of this joins us chief economist at high HS.
He's in Lexington Massachusetts good to have you on today.
-- -- -- not -- -- -- we have time tomorrow the way things are looking all right what's the silver lining that's -- of the drop in productivity.
Well basically businesses have squeeze as much as they.
And out of their workers so to grow their top line.
They need to add.
More.
Jobs basically more employees.
And you we saw a rapid pickup in employment growth from the third quarter to fourth quarter we added.
450000.
Jobs in the US economy in the in the third quarter 600000.
In the fourth quarter.
We fell right to the productivity numbers and other words so the good news is they're hiring more that bad news is.
Productivity is not rising as rapidly exactly falling a little bit this is not bad news as far as I'm concerned it actually sets the stage for a better economy going.
Forward because -- story had -- to put.
But -- saying in some perspective and we -- the story over and over that companies are doing more with less and that was what what's making the production there are -- -- we're gonna make the most of it here will cut back on how many human beings who have for example we'll do more.
-- try to -- with machinery or we'll just do will cut our costs and -- Have the same amount of production so that had been the story for years now we get a C at a different time turnaround do you think and that.
Pattern for the rest of the year now.
Well part of it will will in fact be that so we will see weaker productivity growth stronger employment growth which is -- in the end for -- for this recovery that.
To be self sustaining if you well.
But some of that big drop in the fourth quarter was because of the flu -- GDP numbers if you remember we had a -- -- point one.
Or fourth quarter GDP all because of inventories and defense spending.
Other components -- growing.
We think first quarter will be 2% growth in the US economy so the productivity number we'll still be weak in the first quarter but not as bad as that -- minus you know 22 in the in the fourth quarter.
In the bottom line then because over an offer we have to still even after.
The recession and everything we've been three saw people coming on telling -- what's wrong with the economy bigger fairly positive.
I guide your outlook so tell us what's the best thing right now about the United States economy is you see -- Well -- two -- three good things going on one has of course consumer they're continuing to spend that about a 2% rate that 70% of the economy second housing is recovering we would not have had any kind of decent recovery without housing.
Third we've got an energy boom going on which is adding a lot of jobs in parts of the country North Dakota Pennsylvania places like that so that quite a few bright spots in the economy they go we have Bob as a -- we get the the other side that all the time self.
Pretty well up put together by an -- there -- -- and airmen.
