Productivity: How To Read The Numbers

It is now clear that productivity growth for the U.S. economy in the fourth quarter of last year rose 3.7%. This is extraordinary, especially so late in a business cycle that is now officially the longest peacetime expansion in U.S. history. For the past three years, productivity growth has averaged 2%, almost double the rate of the '70s and '80s. The big question is whether the U.S. is returning to, or even exceeding, its historic trend of 2% annual increases in productivity. The stakes are high. As any observer of the American economy can see, big productivity gains deliver terrific growth, low inflation, rising real wages, and low unemployment--the best of all possible worlds.

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