Does Federal Reserve Chairman Ben Bernanke Realize The US May Be Facing An Innovation Crisis?

With the housing decline beginning to hurt job growth in the rest of the economy, pressure is building on Fed Chairman Bernanke to cut interest rates fast and sharply. One key metric Bernanke should be looking at as he ponders when and how much to cut is productivity. Of all the measures of innovation, productivity growth is probably the most all-encompassing. And that measure, productivity growth, is down sharply. Over the past decade, nonfarm productivity growth averaged a very strong 2.6% but over the past year that rate has fallen to just 0.9%. This takes us back to the dreadful 70s and 80s, way before the tech and internet boom of the 90s.

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