A complex array of factors are being discussed as the cause of an unexpected change in a key United States economic metric. A recent government report from the United States Bureau of Labor Statistics for the third quarter of 2019 stated that productivity, an important measure of economic output, has declined by an annualized rate of 0.3%. This is far off the expectations of a nearly 1% annualized increase that were predicted by analysts. This decline in productivity among American firms, the first reported since late 2015, is another piece of evidence of a slow recovery from the 2008 recession which is only back to full strength in some metrics 11 years after the initial collapse.
The last two quarters had gains in line with or above estimations that were published before the BLS' findings. However, for much of 2019, there has been a considerable amount of discussion and debate as to whether the conflicting signals are evidence of an upcoming recession or just further noise coming from a relatively weak recovery. Uncertainty over the United States' economic relations with China has not had a huge impact on markets in the short term, but that combined with economic indicators that show a flat or indistinct trend are causing analysts to predict roughly a 50% chance of a recession over the course of the next two years. It remains to be seen whether this recession will come to pass, but it certainly has analysts concerned.
In addition, labor costs have risen by an annualized rate of 3.6 percent in the third quarter, which outpaces the GDP growth rate of 1.9 percent reported in that same quarter. This may bode well for consumer spending in the fourth quarter of 2019, which includes the busy holiday shopping season. The question of whether these economic figures will be able to stave off a recession in the near future remains to be answered and the mixed opinions from economic analysts makes that question more difficult to answer.