GDP-Less Recovery and the Rising Labor Share of National Income

The hot new topic to address this week is that in the early months of 2012 we appear to be witnessing the reverse of a “jobless recovery,” an economic growth cycle in which the increase in gross domestic product is not large enough to justify the quantity of net job creation. Joe Weisenthal observes that one symptom of this is an increase in the labor share of national income from its very depressed level:

This indicates that we potentially have a long way to go in this regard. One stylized way to think about it is that increasing labor costs in China are a negative productivity shock to U.S. firms that use Chinese-made components in putting together their final product. This same trend, however, boosts U.S. manufacturing and the trend toward “reshoring.”

Now these are all very tentative trends so I wouldn’t put too much stock in them. It’s very possible that we’ll just see a large statistical revision to the GDP numbers.