In the long run, strong growth of productivity is unambiguously positive, as it implies that the prospects for increases in the general standard of living remain favorable. But the recent performance also is likely a sign that businesses are being unusually cautious in their hiring. Indeed, the labor market has not yet materially improved in the current expansion.
The level of private payroll employment in October is still only marginally above the April low. And the unemployment rate has come down only slightly from its 6 percent peak earlier this year. Another symptom of business caution is the sluggish rise in business investment compared with previous recoveries. In contrast, the household sector has been a source of strength this year.