Turns out we were all less productive in the first quarter. According to the Labor Department, productivity fell 2.7% in the first three months of the year, despite the fact that output — all the stuff we make in this economy — went up during the same time period. What matters here is how the Labor Department defines productivity.

You might think you’d be more productive if you’re making more stuff. But in this case, productivity is largely defined by how much you’re producing per hour.

If you’re working more hours? “You could be making more, but it’s taking you even longer to make that incremental, additional output,” said Sarah House, senior economist at Wells Fargo. “And so that means that we’re being less productive in that case.”

The Labor Department isn’t trying to call out your coworker for being lazy or anything — we’re talking about the economy as a whole here. And overall, more hours are being worked because more people are working.

After all, the economy’s still adding a lot of jobs. “Particularly in some industries like leisure and hospitality, it’s been really difficult to attract and retain employees, and so in industries like that, you’re still seeing some catchup hiring,” House said.

Meanwhile, output that’s the amount of stuff we’re making is not keeping up, said Menzie Chinn, an economics professor at the University of Wisconsin.

“Production had jumped in the wake of the pandemic. And so what you have is the growth rate of production, which is largely determined by demand, is slowing a lot,” he said.

Output is also being held back, because there are still plenty of positions that haven’t been filled, according to Peter Orazem, a labor economist at Iowa State University.

“When you don’t have enough resources, when you don’t have enough inputs, it actually detracts from the productivity of the people who are working,” he said.

And that’s not a good sign for the economy, said Jason Furman, an economics professor at Harvard. “Productivity is probably the single most important thing in the economy. It’s the most important determinant of living standards over time.”

Furman added that we also want productivity to keep up with wage growth. If wages rise and businesses are more productive, they don’t have to raise prices as much because they’re making and selling more products.

“If instead, wages are going up but you have no productivity growth, then businesses are going to want to pass along all of that in the form of inflation,” Furman said.

And that, he said, could make it harder for the economy to avoid a recession.

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