It’s easy to find gloomy predictions for continued slow growth of the US economy. Thus, Lee Branstetter and Daniel Sichel caught my eye with their essay, “The Lee Branstetter and Daniel Sichel caught my eye with their essay, “The written as a “Policy Brief” for the Peterson Institute of International Economics (June 2017, PB17-26). Here how they start:
Labor productivity performance in the United States has been dismal for more than a decade. But productivity slowdowns—even lengthy ones—are nothing new in US economic history. This Policy Brief makes the case that the current slowdown will come to an end as a new productivity revival takes hold.
Why the optimism? Official price indexes indicate that innovation in the technology sector has slowed to a crawl, but better data indicate rapid progress. Standard measures, focused on physical capital, suggest that business investment is weak, but broader measures of investment that incorporate intellectual and organizational capital report much more robust investment. New technological opportunities in healthcare, robotics, education, and the technology of invention itself provide additional reasons for optimism. This Policy Brief gauges the potential productivity impact of these developments. The evidence points to a likely revival of US labor productivity growth from the 0.5 percent average rate registered since 2010 to a pace of 2 percent or more. A productivity revival of this magnitude would provide a solid foundation for steady increases in wages …
