GREENSPAN OPTIMISTIC ON PRODUCTIVITY

The increase in nonfarm business output per hour over the past year will almost surely be reported as one of the largest advances, if not the largest, posted over the past thirty years. We at the Federal Reserve, along with our colleagues in government and the private sector, are struggling to account for so strong a surge. We would not be particularly puzzled if the increases in output per hour were occurring during a period of very rapid economic growth, such as has often attended recoveries from steep recessions. Historically, such recoveries have allowed overhead and maintenance employee hours to be spread over a rapidly increasing level of production. But during the past year we averaged only modest economic growth.
Source: Federal Reserve Board
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