Source URL: https://substack.com/browse/business/post/148534873

Summary

• American economic output per hour worked has risen 8.9% over the last five years, faster than any point in the 2010s, despite the COVID-19 pandemic.
• The US has seen more than double the productivity growth of its peer nations, with the service sector driving the majority of the gains.
• The recent productivity boom has led to significant increases in real wages, household consumption, and personal welfare for Americans.
• The boom is attributed to factors such as a strong labor market, investment in productivity-enhancing capital goods, and workers switching to higher-paying roles.
• Sectors like professional & business services, information, and food services experienced notable productivity growth, driven by factors like remote work and reorganization.
• The boom also led to increased entrepreneurship and business formation, contributing to innovation and investment.
• Capital intensity, including investment in computers, software, and R&D, has significantly increased post-COVID, further boosting productivity.
• The US economy's focus on both technological innovation and macroeconomic incentives for rapid deployment has set it apart from other high-income countries in terms of productivity growth.

Mind Map

mindmap
  root((America's Productivity Boom))
    (Productivity growth)
      (Rise in economic output per hour worked)
      (Historic achievement)
      (Long-term increase in wages, consumption, and prosperity)
    (US vs. peer nations)
      (Double the productivity growth)
      (Increased employment levels)
    (Manufacturing vs. service sector)
      (Stagnant manufacturing productivity)
      (Significant gains in service sector)
    (Impact on real wages)
      (Higher household consumption)
      (Increased personal welfare)
    (Causes of the boom)
      (Strength of labor market)
      (Investment in productivity-enhancing capital goods)
      (Work from home as a permanent facet)
      (Job switching and higher-paying roles)
    (Risk to the productivity boom)
      (Slowing labor market)
      (Decline in investment for automation)
    (Where of the productivity boom)
      (Labor productivity as a measure of economic health)
      (Acceleration in key white-collar sectors)
      (Radical reorganization in accommodation & food services)
      (Volatility in healthcare and recreation)
    (Professional, business, and information sectors)
      (Significant productivity gains from remote work)
      (Increased investment in computing infrastructure, web search, and management)
    (Boom in previously stagnant sectors)
      (Efficiency gains in food service)
      (Increased investment in productivity-enhancing technologies)
    (How of the productivity boom)
      (Reallocation of workers to more efficient roles)
      (Job switching and wage growth)
      (Reallocation from low-wage to high-wage industries)
      (Increase in entrepreneurship and self-employment)
      (Rise in capital intensity)
    (Conclusions)
      (Bulking and cutting phases of the US economy)
      (Combination of technological innovation and macroeconomic incentives)
      (Targeting early COVID relief towards people)
      (Structural benefits of higher employment and tighter labor markets)
      (Forecast for sustained productivity growth)

• Practice Quiz