US Productivity Is on the Upswing Again. Will AI Supercharge It?
Output per hour has recovered after unprecedented declines in 2022 and 2023. A potential boom driven by artificial intelligence could bring benefits and pitfalls.
Will AI rival the Industrial Revolution?
Photographer: MPI/Archive Photos/Getty Images
Remember the productivity mini-freakout of 2022 and early 2023? Real output per hour in the nonfarm business sector, the most watched measure of labor productivity, had posted five consecutive quarters of year-over-year declines, the first time that had ever happened (“ever” in this case going back to the late 1940s, when the US Bureau of Labor Statistics data series begins). “Americans are becoming less productive, and that’s a risk to the economy,” was one headline. “American worker productivity is declining at the fastest rate in 75 years — and it could see CEOs go to war against WFH,” was another.
That freakout is over. Three consecutive quarters of strong growth have put productivity either back on trend or well above it, depending on which recent trend line you’re following. Productivity’s sharp rise and fall from 2020 to 2022 was apparently just another one of those weird pandemic phenomena, now disappearing in the rearview mirror.