Experience, Hard Numbers Part Company on Productivity
Economist Martin Neal Baily calls it "cognitive dissonance" - a gap "between what the numbers say and what people tell you."</br></br>U.S. businesses, operating in an intensely competitive world economy, have been concentrating for several years on cutting costs and becoming more efficient. But the official numbers show little sign that those efforts have lifted the long-term trend in U.S. productivity growth, said Baily, a fellow at the McKinsey Global Institute, a small Washington think tank.</br></br>Yesterday, the Labor Department revised downward its previous estimate of how fast productivity - output for each hour worked - rose in 1992 and 1993. The revisions were the result of more complete information about how many hours were worked.</br></br>The revised path for productivity is plotted on the chart at the right for private businesses other than farms and for the manufacturing industry.</br></br>The chart shows that productivity grew at a healthy rate beginning in the latter half of 1991, tapered off again early last year and accelerated once more as 1993 ended. Even after the downward revisions, which knocked 0.3 percentage points off the highest point on the chart, the 3.3 percent rise in the period that ended with the final three months of 1992, the recent record is significantly better than during most of the 1980s.