US Productivity Declines

By many measures, the US economy is recovering: stock market indices, unemployment, wages, etc. But, productivity is declining.

“After growing each year from 2010 through 2015, the latest data show that, in 2016, productivity declined by 0.2%.” – Quartz

Even during the busting of the Internet Bubble, productivity typically rose by more than 1% per year. Since 2010, when there was a surge to almost 3%, productivity has been trending down. Economists don’t know why. One possible explanation is that companies are investing less in R&D. Money not spent on R&D may be going to the increasing cash accounts that are now measured in the trillions. That provides a short term gain at the risk of losing long term benefits. If the trend continues, it suggests lower growth and subsequently lower tax revenues, especially as more people retire or grow too old to work.

Link: US productivity growth is negative and economists aren’t sure why – Quartz