I hate to differ with Kash but quarter by quarter productivity changes is a noisy series. Productivity growth in 2006QI was strong but has been weak since then. Who knows what the fourth quarter will bring?
Stefan Karlsson writes:
Productivity growth on the previous quarter fell to zero, and year over year productivity growth fell to 1.3%-the lowest since 1997. But even as productivity growth have dramatically accelerated, compensation fo labor have in fact accelerated. Real compensation is now up 3.2% over the previous year and unit labor costs is up 5.3%. While we will have to wait until the next GDP report for the first statistics on third quarter corporate profits, it seems likely that corporate profits fell.
So the last four quarters on average has been a bit disappointing for productivity growth and real compensation has increased a bit. So perhaps the declining labor share is finally over. But go back to Kash’s graph of productivity growth and real compensation growth and notice there have been quite a few years where real compensation failed to keep pace with productivity.