Advisor Voices

Advisor Voices: Productivity Soars

03 May 2019
Investment Strategist

Labor productivity growth in the first quarter of 2019 soared, growing at 3.6% from the previous quarter, the largest gain since the fall of 2014. On an annual basis, it rose 2.4%, which is the highest since the third quarter of 2010 as the country emerged from the recession. This is a meaningful increase, because productivity has been stubbornly low over the last eight years, with both quarterly and annualized growth averaging just 0.8%.

The BLS also measured unit labor costs in its May 2nd report, which decreased 0.9% from the last quarter, and increased just 0.1% over the last year, the lowest annual increase since the end of 2013. These lower costs are not due to lower wages, which have been increasing along with hours worked, but they may be due to better efficiency. With the tax cuts that were enacted, companies did invest some of their extra cash in improving their existing businesses. This could be the start of those new efficiencies contributing to productivity growth.

After eight slow years, we are not convinced that this one quarter is the start of a productivity boom, but if we have a trend of improved productivity, it could mean that the U.S. economy could continue to grow. This trend would likely lead to higher wages over the longer term as well, since employers can afford to pay efficient employees more without lowering their profits. This, in turn, would be another positive for the U.S. economy as the average consumer should have more money to spend.



Past performance is no guarantee of future results. Opinions are as of the publication date, subject to change and may not come to pass. This is for informational purposes only and shouldn’t be considered investment advice.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Calamos Wealth Management LLC), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.

Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Calamos Wealth Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/ her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Calamos Wealth Management, LLC is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. If you are a Calamos Wealth Management, LLC client, please remember to contact Calamos Wealth Management, LLC, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Calamos Wealth Management, LLC’s current written disclosure statement discussing our advisory services and fees is available upon request