Past, Present and Future
Edited by D. S.P. Rao and Bart van Ark
Chapter 12: Revisiting U.S. Productivity Growth over the Past Century with a View of the Future
This chapter looks ahead 20 years and predicts future growth rates of U.S. labor productivity and potential real GDP. Yet we know nothing about the future unless we understand the past, and this chapter provides a new interpretation of the growth of labor productivity and of multi-factor productivity (MFP) since 1891. Everything in this chapter refers to the U.S. and the reader is referred elsewhere for an interpretation of the divergence of productivity growth in the U.S. and Europe in the postwar period, with a European catching up process through 1995 and a falling back since then (see Dew-Becker and Gordon (2008) and Timmer et al. (2010)). The chapter begins with the short-run facts by providing up-to-date productivity and potential GDP trends based on U.S. quarterly data through the fourth quarter of 2009 (henceforth 2009:Q4). The trends and deviations from trends (i.e., ‘gaps’) are new and constitute an update with improved methodology of my paper (Gordon, 2003) on the 2001–04 ‘explosion’ in U.S. productivity growth. We learn that the productivity explosion in 2001–04 unraveled rapidly in 2004–07 prior to another explosion in 2009.
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