, Columnist
Productivity Is Rising If You Know Where to Look
Recent capacity growth has been understated.
It's gotten easier.
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Former Treasury Secretary Larry Summers recently lamented that “poor prospects for sustained rapid growth are not surprising given the economy’s weak foundation. Despite record-low capital costs and abundant corporate cash as inducements to investment, productivity growth has been slow.”
He has a point. Nonfarm productivity over the last five years has expanded at an annual rate of just 0.8 percent, a pace almost without precedent. Yet, weak productivity growth isn't guaranteed to continue to be feeble and recent evidence presents reasons for optimism.