Thanks to the government shutdown, the official report on the nation’s economy was delayed until late February. The Commerce Department released a belated report on Q4 and 2018 as a whole, and the results show a strong national economy.
In fact, the United States saw a 2.6% growth in GDP in Q4; economists had only predicted a 2.2% increase, despite stronger growth in the second and third quarters of the year. Overall, that means U.S. GDP grew by 2.9% in 2018. That matches the economic performance of 2015, the highest growth rate seen since the Great Recession.
So while economic growth did slow down at the end of 2018, the economy is still in a very healthy place. For pessimists, there is reason to doubt this growth will continue. The economic growth caused by the recent federal tax cut likely won’t last into 2019, and the global economy is best described as sluggish.
In addition, 2018 saw only “tepid growth” in worker productivity, one of many indicators that GDP growth of 2.5% to 2.9% is the new normal here in the United States. In many advanced economies, worker productivity, also known as worker output, has been flat or declining for many years.
While many economists assumed that new technologies would lead to greater productivity, this has not always been the case. In fact, technology is often the cause of lost productivity — and not just because employees may waste time scrolling through Facebook or Twitter. In the modern office, printer and copier costs are now the third-largest office expense.
In the transportation industry, unnecessary idling of just two hours per day can waste $780 per year per truck. Plus, many hours are spent each year training employees on new types of software and technology.
Productivity may be flat in the United States, but consumer spending has been on the rise, thanks in part to rising wages.
In short, the report from the Commerce Department has reasons for both optimism and pessimism.