That’s the new game all the nerds are playing. You just write down all the reasons why people say productivity isn’t growing as fast as it was 15 years ago, and you ask noted productivity expert John Fernald: “Whussup with that?”
Of course, while podcasts are fun and convenient, they don’t support graphs, so here’s a graph of year-over-year changes in productivity growth. Fernald points out how noisy the series is, so I’ve added a slow-moving trend which captures the important facts of the data: productivity was growing at around 3% until the mid-1970s. Since then, it’s grown a lot slower than that, though that hump in the latter 1990s is something to which we devote a lot of analysis in the podcast. At any rate, over the last decade, productivity has grown at around 1.2.
Even while we’re crackin’ wise and having fun in the discussion, it’s essential to recognize that when President Trump and Secretary Mnuchin go on about how their awesome program is going to deliver 3% growth, they’re mainly talking about changing that trend in the picture, about which Ben, John, and I are all duly skeptical. (I discuss their real motivation for such nonsense here–the faster growth assumption sops up a bunch of red ink caused by their big, regressive tax cuts.)
Special bonus for OTE’ers: You’ll hear a snippet of Eliane Elias on the podcast, but here’s one of her recent concert performances that’s worth a close listen.