American workers were less efficient in the July-September quarter, pushing down productivity for the first time since late 2015.
With economic growth slowing, in part because the stimulus from Trump administration tax cuts is fading, many economists worry that worker productivity will follow suit. Most economists also believe that the Trump administration's trade war with China has discouraged businesses from investing more in productivity-enhancing tools such as computers and machinery, offsetting the benefits from the 2017 corporate tax cut.
Greater productivity is an important ingredient in raising living standards. It enables companies to lift worker pay without raising prices on customers. The Trump administration promoted its 2017 corporate tax cut as a policy that would raise productivity by encouraging businesses to invest in more computers, machinery and other equipment. Productivity did pick up in the first half of this year after growing modestly in 2018, but it now appears to be dropping back to the slow growth that has occurred since the Great Recession ended.
Still, Stanley said it is too early to determine whether or not the administration's tax cuts have boosted investment.
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