America's Productivity Slump - 7/1/15
Economists often define productivity as economic output per hour worked. In recent years, productivity growth has been soft in America. In fact, productivity in this country has been expanding at one of the slowest rates since World War II. According to the Wall Street Journal, the only worse period for productivity growth transpired during the late nineteen seventies and early nineteen eighties.
Economists differ radically in terms of their explanations for America’s productivity slump. Two economists from Goldman Sachs recently indicated that productivity might not be so bad and that the problem is that the productivity statistics are inaccurate. They write, "The productivity slowdown of the nineteen seventies featured declining profit margins, rising inflation, and declining equity valuations. In the past decade, by contrast, profit margins have hit all-time highs, inflation has remained very low, and equity valuations have surged."
This suggests that productivity is simply being mis-measured according to the Goldman Sachs’ economists. Economists elsewhere, including at J.P. Morgan, disagree, suggesting that the productivity slowdown in America is real.