As part of my latest piece on Fed policy, I asked several top economists for their forecast of long-term productivity growth. The exact question for the mini-survey was:
What do you think the sustainable rate of productivity growth is likely to be over the next few years? (I’d prefer a single number, but a range would be okay too)
This is obviously a key question for Fed policy, forecasts of future tax revenues, U.S. competitiveness, American well-being, and basically anything that has to do with the future. High numbers are good, low numbers are bad.
I asked the exact same question for a story in 2004 (see here and here). Back then, the responses ranged from a high of 3.3% per year to a low of 2.25%, with an average of 2.75%.
The current mini-survey shows that the range of answers has compressed (see below). The forecasts now run from 2.25% to 2.5%. I didn’t do an average, since the range was so narrow.
But that’s still pretty good. The long-term historical average since World War II is 2.2%, the ten year average is 2.56%.
The one cautionary note, which I raise in the story, is that long-term productivity trends can shift unexpectedly. And the recent slowdown in reported productivity does worry me.