And during the second and third quarters of this year, output per hour increased at the astonishing average annual pace of about 7-1/2 percent. This outcome has been associated with a dramatic increase in profits despite little evidence of corporate pricing power. The explanations of the past two years’ surge in productivity are wide-ranging.
One hypothesis is that some of the increase represents a temporary rise in the level of productivity reflecting a view that an unusual amount of caution is leading businesses to press workers and facilities to a greater degree than can be sustained over the longer haul.