In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s second update discusses productivity.
- Today’s data on worker productivity showed that we are off to a slow start in 2013. The data rose by only 0.7 percent in the first quarter, well short of historical average gains of around 2.0 percent. In fact, productivity gains have been extremely sluggish in the prior two years as well, with less than one percent gains.
- REALTOR® productivity, though not part of the government survey, is rising from the simple fact that more homes are selling with fewer REALTORS® in the business. Recall there were 1.4 million REALTOR® members at the peak of the bubble year. Now there are at roughly 1 million members today.
- Productivity is very important economic data to gauge the long-term standard of living of a country. Rapid productivity gains translate directly into big income gains and a rising standard of living. China, for example, is undergoing strong productivity gains. Interestingly, 65 percent of the Chinese agree that capitalism works well and should be promoted. By contrast, 55 percent of Americans have the same view. Only about 30 percent of the French have the similar view.
- Within 5 to 10 years an increasing number of economists believe Mexico could experience a productivity renaissance like that occurring in China, provided private property rights are well protected. If Mexico takes off economically then the number of Mexican immigrants coming into the U.S. will greatly taper off or even reverse with more people of Mexican heritage returns to Mexico.
- If U.S. productivity does not increase back up to the historical 2 percent growth rate then the current younger generation will only be mildly better off than their parents in term of economic purchasing power. If productivity halts to zero, which no one is forecasting, but just as a scenario, then the younger generation will experience a lower standard of living then their parents.