Productivity in Q4 2016 was estimated to have been 1.29%, suggesting that last quarter was merely bad rather than unusually bad as it had been just before. Productivity during what was the near-recession in the three quarters including and after Q4 2015 was negative in all three. That would suggest, strongly, why labor market statistics have uniformly described a rather sharp slowdown in labor utilization throughout 2016. The BLS estimates that total hours worked grew by just 0.91% Q/Q (annual rate) in Q4, following 0.61% (revised) in Q3. Last year closed out at what was the lowest two-quarter growth rate since the Great “Recession.”

For the year overall, the average gain in total hours was a mere 1.15%, also the lowest since Q2 2010 when hours were still contracting. But because the BEA figures private output (subsection of GDP) was practically unchanged in 2016 as compared to 2015, the slowdown in labor translated into slightly more productivity, or at least productivity at a much less striking inconsistency.

Whereas total hours gained an average of 1.57% in 2015, they did only, again, 1.15% in 2016. With a small increase in private output, productivity is figured (as the leftover) to have increased to just over 1%. Productivity throughout the 1990’s, for the sake of relevant comparison, averaged just about 2% with 2.4% gains in total hours worked. Thus, the economy in 2016 was operating at about half pace on both sides. Given the way conditions developed in 2015 as far different than what was expected, there was clearly nothing “transitory” about weakness that continued for a second straight year (though it does leave the usual questions about the distribution mechanics labor to capital through productivity).

The FOMC policy statement issued yesterday doesn’t actually say a whole lot, and never does, but given these figures what it did say wasn’t just the usual boilerplate language, as it bordered on open duplicity: