Long-term productivity

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.

Added Note 9/19 For more on productivity, see spencer’s post on angrybear here.

             
The Productivity Consensus
  Expected long term productivity growth
   
  Forecast Affiliation  
Hal Varian 2.5 University of California at Berkeley
Alan Krueger 2.5 Princeton University  
Dale Jorgenson 2.4 * Harvard University  
Bill Nordhaus 2.3 Yale University  
Martin Baily 2.25 Brookings Institution  
Kevin Hassett 2.25 American Enterprise Institute
   
*Preliminary          
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