Just a quick update to the productivity chart. (quarterly data, link to data)

What does this graph show? When the economy is approaching the effective demand limit, productivity stalls. Then a contraction will release a productivity increase.

The red line is the effective demand limit, where real GDP (Y) equals effective demand (E).

Since the last post, I have added two more dots at the very end of the line above. If you can't see them it's because productivity has completely stalled out against the effective demand limit, as has been the norm for since my data starts in 1967. When the line begins to move in a northeast direction, an economic contraction begins to form. Real GDP will rise in relation to labor hours and so will effective demand.

Related article:

Lambert, Edward. *Productivity really is demand constrained*. Effective demand blog. 7/27/2013

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