First-quarter productivity growth, as measured as output per hour worked, was revised to flat to the previous year in the United States by the Bureau of Labor Statistics. That was an improvement from the first estimate, but continues to the post-recession trend of lower productivity growth in the United States, which has averaged 0.7%. Going back to 1948, productivity growth has averaged 2.2%. The BLS’s estimate of output was raised from 1.0% to 1.7% in the first quarter, while hours worked was revised to 1.7% from 1.6% – resulting in the flat productivity growth versus the first estimate of -0.6%.
Slowing productivity growth is a serious concern in the United States and throughout the developed world. No means exist long-term to raise living standards outside of becoming more productive.
Some, particularly among President Trump’s economic team have suggested that lower business regulation and tax rates could encourage greater investment, leading to higher productivity and economic growth. Other economists dispute the assertion and argue that future economic growth is likely to be below long-term trends.
Economics Wire recently interviewed Northwestern economist Robert Gordon, author of the book The Rise and Fall of American Growth, who argues that long-term growth is likely to be near 1.6% annually since the transformational changes taking shape a century ago are unlikely to be repeated. Since the recession ended, his estimates have been pretty close to reality. You can read our full interview with Robert Gordon here.
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