This page tracks labor productivity, unit labor costs, and related measures for the U.S. nonfarm business sector. These indicators show how efficiently the economy converts labor hours into output and how compensation trends affect inflation and business profitability.
Because productivity and labor costs directly influence inflation, wages, and corporate margins, this report is one of the Federal Reserve’s most important tools for assessing economic pressure.
What This Chart Shows
- Long‑term trends in U.S. labor productivity
- Periods of strong efficiency gains (1990s, early 2000s)
- Productivity slowdowns that contribute to inflation pressure
- How output per hour responds to recessions and recoveries
- The relationship between productivity and wage growth
Key Components of Productivity & Costs
Labor Productivity (Output per Hour)
Measures how much output workers produce for each hour worked. Higher productivity reduces inflation pressure and supports wage growth.
Unit Labor Costs (ULC)
Tracks how much labor costs rise relative to productivity. ULC increases when wages grow faster than productivity — a key inflation signal.
Output
Total goods and services produced by the nonfarm business sector.
Hours Worked
Total labor hours used to produce output, reflecting employment and workweek trends.
Compensation per Hour
Total labor compensation, including wages and benefits.
Why Productivity & Costs Matters
- Rising productivity supports economic growth without inflation
- Falling productivity increases inflation pressure
- Unit labor costs help predict future price trends
- Corporate margins depend heavily on productivity trends
- The Federal Reserve uses this report to assess wage‑price dynamics
Summary
The Productivity & Costs report provides a comprehensive view of how efficiently the economy operates and how labor costs evolve over time. Strong productivity growth allows businesses to raise wages without raising prices, while weak productivity can lead to inflation and margin compression. This makes productivity one of the most important long‑term drivers of economic performance.
Data Source
U.S. Bureau of Labor Statistics (BLS) via Federal Reserve Bank of St. Louis (FRED)