The Recent Rise and Fall of Rapid Productivity Growth
News is “The past decade has been wrenching for the U.S. and global economies. In the depths of the Great Recession, the U.S. unemployment rate rose to 10%, reflecting an economy operating far short of its potential. As the effects of the Great Recession have receded, it is important to know how fast the economy can sustainably grow going forward. This Economic Letter explores trends in productivity growth—a key contributor to this sustainable pace. A recent paper by Fernald (2014a) finds that the exceptional boost to productivity growth from information technology in the late 1990s and early 2000s has vanished during the past decade. Although there is considerable uncertainty, a relatively slow pace is the best guess for the future.”