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Illustration: Aïda Amer/Axios

Wednesday's productivity report is the latest sign that historically low U.S. unemployment may be indicating a sick, rather than a healthy economy.

What's happening: As uncertainty has increased over the U.S-China trade war and other geopolitical events, companies that have the capacity to invest in new equipment, technology or factories are holding off and hiring workers to pick up extra slack instead.

Why that's bad: The increase in hiring is less about expansion or optimism than the fact that workers are a cheaper investment, and one that is easier to reverse should the economy go south.

  • "If the economy improves, that’s great, you’ve got more workers; if we do have a recession, then you have the flexibility of deciding whether you need to lay off some workers," Bernard Baumohl, chief global economist at The Economic Outlook Group, tells Axios.
  • "At that point, you’re treating workers as inventory."

By the numbers: This story of hiring as uncertainty insurance is borne out in the data, experts say.

  • U.S. real output per hour, seen as the standard measure of worker productivity, fell by 0.3% in the third quarter from the second, marking its first quarterly decline in almost four years.
  • Similarly, the latest U.S. GDP report showed business investment had declined for the second quarter in a row, falling by 3% from the quarter before.

Why it matters: Productivity is the secret sauce to economic growth, and the U.S. has had underwhelming productivity growth for the last 15 years — a full 1% below the pace of annual growth in the 15 years prior.

  • Further declines could weigh seriously on already slowing GDP.

Threat level: A basic way to measure productivity is, "Do you give workers more tools?" David Kelly, chief global strategist at JPMorgan Asset Management, tells Axios. "We're actually increasing the number of workers and decreasing the number of tools in the last two quarters. That doesn't bode well."

Yes, but: Experts also remain bullish on a positive outcome to the trade war and other uncertainties clouding the economic outlook.

  • Further, the rising wages of Americans — and the increasing trouble businesses are having finding qualified people to hire — may force corporate America's hand.

The last word: "If freedom is just another word for having nothing left to lose, then productivity is just another word for having no one left to hire," Kelly says.

Go deeper

Updated 5 hours ago - Sports

Olympics dashboard

Katie Ledecky in Tokyo. Photo: Ding Xu/Xinhua via Getty Images

🚨: Simone Biles won't compete in individual vault or uneven bars

🏊‍♀️: Katie Ledecky wins gold in women's 800m freestyle

🏊: Caeleb Dressel breaks world record in men's 100m butterfly, 3rd gold

🇬🇧: Britain wins gold in first-ever Olympic mixed 4x100m medley relay

🎾: Novak Djokovic defeated in Olympic semi-finals

💻: Japan tests teleporting games and "remote cheering"

Go deeper: Full Axios coverage

Updated 6 hours ago - Sports

Simone Biles won't compete in individual vault or uneven bars Olympic finals

Photo: Loic Venance/AFP via Getty Images

Simone Biles will not compete in the individual vault or uneven bars finals at the Tokyo Olympics, USA Gymnastics announced Friday.

Why it matters: USA Gymnastics said Biles, who previously withdrew from the individual all-around and team finals to prioritize her mental health, will continue to be evaluated to determine if she'll compete in the balance beam or floor exercise events.

7 hours ago - Sports

American Katie Ledecky wins Olympic gold in women's 800m freestyle

USA's Katie Ledecky reacts after taking gold in the final of the women's 800m freestyle race. Photo: Odd Anderson/AFP via Getty Images

American superstar swimmer Katie Ledecky grabbed her second gold medal of this year's Olympic Games, winning the women's 800-meter freestyle race Saturday in Tokyo.

Driving the news: Ledecky, who holds the world record in the 800m freestyle, is considered one of the best women swimmers of all time. Saturday's final marks her third straight Olympic gold in the event.