The U.S. Economy is trying to break free from its worst economic times since the Great Depression. According to the National Bureau of Economic Research, the start of this last recession was in the December of 2007 and ended in June of 2009 (The Greek, 2010). Many Economists point towards the failure of the banking system and an overload on bad loans that caused the financial meltdown, affecting the rest of the Economy. Whatever the cause of the recession, the effects are clear to see. Labor productivity in durable goods, non-durable goods, and retail have been negatively affected. This paper provides a look at the drop in productivity of the American worker. The statistics for this paper is mainly provided by the Federal Bureau of Labor Statistics (BLS). In this paper, and according to the BLS, labor productivity is measured by the output of goods and services produced per hour. Additional inputs from experts in each industry’s field will explain the direct causes of lower productivity. The baseline reference used in this paper comes from the BLS's change in labor productivity studies from the years 2006 to 2007, 2007 to 2008 and 2008 to 2009. The productivities of goods used in measuring labor productivity are wholesale trade goods and retail trade goods. Wholesale trade goods consist of durable and non-durable goods. Durable goods include such items as vehicles, vehicle parts, furniture, lumber, construction supplies, commercial equipment, metals and minerals, and other miscellaneous durable goods. Non-durable goods items include paper products, chemicals, farm products, petroleum products, apparel, and other miscellaneous non-durable goods. For retail trade goods this is where all wholesale trade goods are sold to the individual consumer. Therefore, retail goods consist of motor vehicle dealers and parts dealers, furniture stores, electronics and appliance stores, building material supply stores, food and beverage stores, restaurants and drinking places, gasoline stations, health and personal care stores, and clothing stores are measured in the retail trade goods statistics. In this paper, and in the BLS's definition of labor productivity, it is a measurement between industry output and the labor time involved in its production. The percentages come from changes in the amount of goods and services produced per hour from one year to the next. Although labor productivity measures output to the hours of all persons in an industry, it does not measure the specific contribution of labor or any other factor of production. Therefore, many influences such as “changes in technology; capital investment; utilization of capacity, energy, and materials; the use of purchased service inputs, including contract employment services; the organization of production; managerial skill; and the characteristics and effort of the workforce” are not accounted for and limited conclusion can be drawn from such data (US Bureau of Labor Statistics, 2010). To an inexperienced eye one can easily come up with the conclusion that due to the recession the labor productivity dropped and labor cost increased. According to the BLS, in 2008 "fewer industries recorded productivity increases in 2008 than in any other year since 1988. Output rose in fewer industries and hours declined in more industries in 2008 compared to 2007." Therefore, the ratio of industry output over labor time to define labor productivity saw industry output shrink faster than hours to make labor productivity drop. Up front predictions in this paper are with an economic recession the first sector of the economy to be impacted is the retail goods. Consumer spending will be a first indicator that a slowdown in demand signaling troubled economic times. During a recession durable goods will take the biggest impact on lower production, therefore, the biggest drop in productivity due to the fact that consumers will stretch their dollars in making durable goods last beyond normal expectancy. Leading out of a recession, we expect to see consumers gain confidence and retail trade productivity to rise with wholesale productivity being slower to recover in reaction to the increase demand by consumers. Starting off with the first year, 2006 to 2007, wholesale trade labor output per hour increased by 2.1 %. Production output rose 3.8%, hours worked increased by 1.7 % , and as unit of labor cost 1.9% more. Durable goods led non-durable goods in the increase of production output per hour by a margin of 2.2% to 1.7%. Durable goods production had a wide range in labor productivity from -8% in labor and construction supplies to a high 13.7% in more productivity in commercial equipment. One must account for the number of employees in these sectors as 266,000 and 674,000 respectively, which accounts for a total of just over 15% of the work force in durable goods. Under non-durable goods the bottom industry in productivity is the druggists goods with a -4.9% growth in productivity and the leader is paper and paper products with a 6.9% increase in productivity. For retail trade worker productivity changes from 2006 to 2007 there was an overall increase of 3.7% with 3% more output and a decline in number of hours required in order to make such production gains by -0.6%. Leaders in the increase of productivity for retail trade were electronics and appliances by 14.3%, clothing and clothing accessory stores rose 8.7% and lawn and garden equipment supply stores rose 17.3% (US Bureau of Labor Statistics, 2010). The 2006 to 2007 changes in labor productivity reflect years of stable economic growth and a stable supply and demand economy. In comparison with changes from 2007 to 2008 and 2008 to 2009 labor productivity decreased with an economic recession. Many other factors play a role in a workers productivity such as labor miss-management or technology; however, the effects of a recession will make labor productivity drop beyond expected normal ranges for a majority of industries. Such systematic decreases in productivity seen in 2007 through 2009 are not results of multiple individual 'other' factors as listed above. Labor productivity fell in wholesale trade and retail trade between 2007 and 2008 by -0.3 % and -1.8 %. Under durable goods, labor productivity actually increased by a slight margin of 0.4%. Leaders in the durable goods sector rise of productivity in 2008 were commercial equipment by 9.2% with almost 21% of the durable goods workforce and machinery and supplies with a worker productivity increase of 6.5% utilizing 22% of total labor force. Averaging down the durable goods productivity to 0.4% were furniture and furnishings production with labor being 15.9% less productive and metals/mineral production being 8.5% lower in labor efficiency. Both industries respectively make up 3.8% and 4.3% of the total durable goods industry workforce. In 2008, labor productivity increased in 35 of the 86 detailed manufacturing industries compared with 51 in 2007. Productivity growth was highest in the computer and electronic products sub-sector, led by the computer and peripheral equipment and magnetic media manufacturing and reproduction industries. Output rose in only 20 % of the industries, compared to 45 % in 2007. As predicted, the first drop in labor productivity came out of retail trade at -1.8% with decreasing productivity in 15 of the 27 measured industries in retail trade. This first sign of troubled economic times can be accounted for by lack in consumer confidence and spending. Leaders in the drop of labor productivity for the retail sector are automobile dealers with a drop of 9.3% followed by jewelry, luggage, and leather goods stores dropping productivity by 9.1%. These luxury goods and the lack of output suggest consumers pulling away from such goods. In 2008 the big three U.S. automakers were called before congressional hearings on then possible bailouts and an exponential drop in auto sales were seen (Isidore, 2008). However, in this same time frame there were huge gains in labor productivity for florist shops at 19%, lawn and garden equipment supply stores at 20.8% and electronic and appliance stores with a jump of 15.9%. Labor productivity fell in wholesale trade, but rose in retail trade in 2009. Productivity changes were -3.3% in wholesale trade and 1.5% in retail trade. Under the durable goods sector you see the largest decreases in productivity with an overall decrease of 6.6%. Leaders in this decline were the motor vehicle and parts industry with a 14.7% decline as a result in the previous year's big drop in auto retail productivity, the machinery and supplies industry with a 13.8% decline, and with these two industries decreased demand you see a 11% decrease in metals and minerals productivity. There were only three industries in durable goods that had an improvement in productivity, they were furniture and furnishings at 2.9%, electrical goods at 2.3% and commercial equipment at 1.8%. Interesting enough the largest decline in total number of jobs, or jobs lost, of any sector over the three years of 2007, 2008, and 2009 is the durable goods sector with a negative 8% in 2009. The automobile industry is a leader with a loss of 6.9% of its work force, 351,000 to 327,000 employees, from 2008 to 2009. However, the number of products produced still dropped even more compared to the reduced numbers of labor force hours to make auto production productivity the biggest decliner. Non-Durable goods although not as effected, actually saw a recovery with a 0.8% growth of worker productivity. The leaders in this slight uptick were druggist goods with 8.8%, farm product raw materials with 8.3%, and miscellaneous non-durable goods at 5.5% increase in productivity. There were only three of the nine measured industries that suffered a decrease in productivity. These three were chemicals at a negative 10.9%, petroleum production with -5.6%, and paper products with a drop of 1.3% productivity. Fortunately, these three industries make up a total 17.5% of the workforce in non-durable production workers. The lower impact of a recession and quicker recovery in non-durable goods is expected with these products being more necessary in a person's purchasing priorities (US Bureau of Labor Statistics, 2010). The impact on chemical productivity by the recession is outlined by Chemical and Engineering News (American Chemical Industry, 2010). In this article they point to demand, hitting rock bottom in January 2009 and improving from there as the cause of hardship in the chemical industry. They also point towards how the automobile industry and construction production are increasing raw material requirements, but all are still leery of future consumer demands. A small sign that may signal the end of the recession is the positive growth of retail trade productivity. Non-durable goods also made a slight recovery. However, after two years of an economic downturn the companies that have remained in business are doing so by ensuring lower production costs and better efficiency. Claiming an end to a troubled economy by using high labor productivity would be too risky. Retail trade fared much better with an overall increase of 1.5% in worker productivity into 2009. Keeping this number from going higher were vending machine operators trailing at -9.2%, miscellaneous store retailers at -8.4%, building material and supply dealers down 5.3%, and used merchandise stores by -4.9%. Interesting enough used merchandise labor productivity grew 8.6% in 2007 and 12.7% in 2008. The leaders in productivity growth for 2009 were other motor vehicle retailers at 14.1%, electronics and appliance stores with a 13.8% increase, and specialty food stores at 13.9% more productivity. All three industries are more of luxury items than necessary goods by retailers. The increased productivity means more output per hour was necessary and demanded by consumers. Also high in increased productivity between 2008 and 2009 were sporting goods and musical instruments retails as well as home furnishings stores. All five of these increases in productivity point towards an end of a recession and growth of consumer confidence (US Bureau of Labor Statistics, 2010). These numbers from 2009 are actually a slight improvement over the 2008 numbers. In 2008 productivity saw a decline in output per hour in both wholesale and retail. However, from 2008 to 2009 retail makes a recovery and wholesale numbers bottom out. As predicted before we would see retail productivity recover first while wholesale lagged behind in the entire cycle. This indicates the reversal of a recession and a beginning to economic growth. Verifying this end of a recession claim the National Bureau of Economic Research stated the recession officially ended in June of 2009 (The Greek, 2010). Likely this was validated by some of the same statistics presented in this paper. At the beginning of this paper and before research commenced on labor productivity in wholesale and retail sectors of the economy three basic predictions were made. Prediction number one was that the first sector of the economy to see a labor productivity drop due to a recession was in retail. As it turns out this prediction was true. Before the recession's full effect the retail labor productivity enjoyed a steady growth of 3.7% between 2006 and 2007. In the next time period of 2007 to 2008, where the signs of a recession were first noticed, labor productivity dropped by 1.8%. The reason for the drop and why retail would see the first drop was due to a drop in consumer spending. Also in the same period wholesale labor productivity dropped a small amount by 0.3%. Of note, durable goods productivity actually increased by 0.4% and non-durable goods making the overall wholesale figure drop. I attribute this disparity between durable and non-durable productivity back to my consumer spending factor. Durable goods include large contract orders such as airplane, ships, and other big money items that are locked into contracts for building a year or more in advance. Non-durable goods having a shelf life of 3 years or less are more responsive to immediate turns in the economy. Therefore, the items that everyday consumers could affect directly were the non-durable goods. The second prediction made was that durable goods would have the largest drop in labor productivity. In the previous paragraph I explained how durable goods would have a late effect in productivity from a recession. The impact on durable goods was not seen until the 2008 to 2009 time period, the end of the recession. However, the factor to explain why it would have the biggest drop in productivity is due to by its definition. Durable goods are goods that are expected to last more than 3 years. These are not your throw away types of goods. With the recession setting in during the 2007 to 2008 time period consumers of these durable goods extended the life of their already purchased durable goods and cut demand for new durable goods. Therefore, durable goods productivity decreased by 6.6% in 2008 to 2009 with motor vehicles and parts, machine and supplies industry, and metals and minerals leading the decrease. The example of how in 2007 to 2008 auto retailers dropped in labor productivity. The lower demand by auto lots for new vehicles impacted auto makers in 2008 to 2009. The last prediction made at the beginning of this paper was the retail sector will be the leading indicator that the recession has ended and economic recovery is underway. By the BLS statistics from 2008 to 2009 retail did increase by 1.5% in labor productivity. The leaders were other motor vehicle retail, electronics and appliances retailers, specialty food stores, sporting goods and musical instrument stores, and home furnishings stores. All of these retail products are more on the luxury goods side of retail goods. With specialty food store retail as being one of the leaders in increased productivity we can see consumers are clearly more confident, they are demanding more steak than hamburger, and specialty food store retailers need to increase labor productivity to meet the demand. Interesting statistic which supports indicators of a recovering economy is the drop in productivity for used merchandise retail. The past changes in labor productivity for used merchandise from 2006 to 2007 and 2007 to 2008 show large increases. This increased need for used merchandise show a more thrifty consumer who is worried about present economic conditions. However, in 2008 to 2009 we see used merchandise retail productivity actually drop. This is a signal that consumers are willing to spend more for new merchandise and are not as worried to stay with the cheaper used alternative. In summary this paper used labor productivity to chart the U.S. economy from 2006 through 2009. Many statistics are available for economists to use to chart economic patterns of boom eras and recessions. Through the statistics presented here we can add in unemployment rates in how they correlate with the rise and fall of labor productivity. What we found out is how different sectors of labor productivity are affected in different ways by consumer spending during a recession. Given these statistics we can make future predictions and even adjust unemployment policy to prepare and mitigate the effects of future recessions. Policy makers can focus on which sectors of the economy will need more help and even find solutions to increase workers' productivity during such hard times. To find such solutions and create better policy many other factors into labor productivity must be accounted for. Factors such as use of technology, labor management, workforce education, and production organization are a few examples. However, as seen with examples in this paper a scientific approach can be applied mitigating negative impacts to the American worker.

Works Cited

American Chemical Industry (2010, January 11). United States: Chemical industry prepares for slow recovery in 2010. Retrieved 03 December 2010 from http://pubs.acs.org/cen/coverstory/88/8802cover17.html.

Isidore, C (2008, November 26). More trouble for auto bailout. Retrieved 01 December 2010 from http://money.cnn.com/2008/11/19/news/companies/auto_hearing/index.html

The Greek (2010, September 21). The Recession is over. Retrieved 03 December 2010 from http://wallstreetgreek.blogspot.com/2010/09/recession-is-over.html

US Bureau of Labor Statistics (2010, August 31). Productivity and Costs by Industry: Wholesale and
Retail Trade, Food Services and Drinking Places Industries,2009. Retrieved 02 December 2010 from http://www.bls.gov/news.release/archives/prin1_08312010.html