This Great Graphic is from the St.Louis Federal Reserve. It shows the recent Q3 productivity report.
The 2.9% increase in Q3 was the strongest since Q3 2010. In turn, the increase in productivity with minimal increase in the wage package illustrates what we think is an under-appreciated development and that is the competitiveness of US unit labor costs.
Unit labor cost fell for the second consecutive quarter in Q3 and has fallen consistently since the end of 2008. In the seventeen quarters since then, unit labor costs have risen in only three quarters, one quarter in each year 2010, 2011 and in Q1 this year.
The combination of low unit labor costs, increasingly cheap energy, and the chronic threat of protectionism will likely continue to encourage production to move back to the US. Apple's decision to produce some computers, shifting some production from China is reflective of this larger development.