Interesting. I’m not convinced, though, that trend labor productivity growth really has increased. Rather the elevated productivity growth rates seen over the past year or so likely reflected more a catch up dynamic. And more recently labor productivity still undershoots the level of its trend (based on an average of statistical trend estimates) but this catch up is close to getting completed. The tailwinds of high labor productivity growth might well fade in 2025.
Not convinced. Raising prices and increasing the velocity of money, which is easy to do in the service economy, coupled with increased online purchasing and online advertising, can greatly increase the GDP without increasing hours worked. A strong dollar also helps. Doctors giving patients 10 minutes, instead of 1/2 hour, and charging more than 1/.3 the previous rate, greatly increases productivity but not recommended.
Why would other nations, many of whom have also experienced inflation and loose monetary & fiscal policy, not be experiencing similar productivity growth?
Service sector inflation has been much lower in other nations - at peak, 7.6 in USA, 5.2 in Germany, 3.9 in France, and 2.3 in Japan. They may not have increased the velocity of money, or increased online purchasing and online advertising. They may also have weakened currencies. In the socialized medicine nations, doctors may give giving patients 10 minutes, instead of 1/2 hour, but they can't charge more than 1/.3 the previous rate.
Was curious if you had heard the theory that the great resignation increased productivity. I first heard a version of it from Danny Dayan, but the loose version is something like older workers are the least productive workers in firms. Especially some of the highest earning workers that also produce the least. He has predicted that we are entering a high productivity era for that and other reasons.
It's a variant of the science progresses one funeral at a time or the research that has shown that older academics gate and obstruct newer academics; when they die/retire more novel research is generated.
Awesome article! I’d imagine soon software AI breakthroughs will cause even more productivity boom in the USA. I believe technologies such as computer use AI will transform the labor market and increase salaries!
Interesting. I’m not convinced, though, that trend labor productivity growth really has increased. Rather the elevated productivity growth rates seen over the past year or so likely reflected more a catch up dynamic. And more recently labor productivity still undershoots the level of its trend (based on an average of statistical trend estimates) but this catch up is close to getting completed. The tailwinds of high labor productivity growth might well fade in 2025.
https://open.substack.com/pub/janjjgroen/p/q3-2024-productivity-and-wages-still
Not convinced. Raising prices and increasing the velocity of money, which is easy to do in the service economy, coupled with increased online purchasing and online advertising, can greatly increase the GDP without increasing hours worked. A strong dollar also helps. Doctors giving patients 10 minutes, instead of 1/2 hour, and charging more than 1/.3 the previous rate, greatly increases productivity but not recommended.
Why would other nations, many of whom have also experienced inflation and loose monetary & fiscal policy, not be experiencing similar productivity growth?
Service sector inflation has been much lower in other nations - at peak, 7.6 in USA, 5.2 in Germany, 3.9 in France, and 2.3 in Japan. They may not have increased the velocity of money, or increased online purchasing and online advertising. They may also have weakened currencies. In the socialized medicine nations, doctors may give giving patients 10 minutes, instead of 1/2 hour, but they can't charge more than 1/.3 the previous rate.
Was curious if you had heard the theory that the great resignation increased productivity. I first heard a version of it from Danny Dayan, but the loose version is something like older workers are the least productive workers in firms. Especially some of the highest earning workers that also produce the least. He has predicted that we are entering a high productivity era for that and other reasons.
It's a variant of the science progresses one funeral at a time or the research that has shown that older academics gate and obstruct newer academics; when they die/retire more novel research is generated.
Awesome article! I’d imagine soon software AI breakthroughs will cause even more productivity boom in the USA. I believe technologies such as computer use AI will transform the labor market and increase salaries!
Very impressive article.
Any thoughts on how long this could last?
Great analogy in the conclusion with the “bulking” and “cutting”!
Great piece!