By Lili Bayer
Economist Paul Krugman wrote in 1994 that “productivity isn’t everything, but in the long run it is almost everything.” We have previously outlined that labor productivity is a critical measure of economic health and an important long-term indicator of the U.S. economy’s future trajectory. In “The Wealth of Nations,” Adam Smith wrote, “the annual produce of the land and labor of any nation can be increased in its value by no other means, but by increasing either the number of its productive laborers, or the productive powers of those laborers who had before been employed.” Productivity, therefore, has long been seen as a primary driver of economic growth, and innovation and technological advances have come to be closely associated with productivity growth.
Nevertheless, America’s labor productivity growth has been slowing down over the last few years, and over the past two quarters, productivity actually declined. This decline is due to a slowdown in
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