• Nonfarm productivity in the United States declined 0.6% in the first quarter of 2017 and, for the full year 2016, the U.S. economy experienced its slowest annual productivity growth in five years.1 As the chart highlights, longer-term business productivity in the United States has been on a gradual downswing since peaking in mid-2004.2
  • The disappointing productivity figure for the quarter was in line with other data released in recent weeks – gross domestic product, inflation and consumer spending, among them – that point to a potential for continued slow economic growth in the coming quarters.3,4,5
  • The Federal Reserve looked beyond such data at its meeting this week, noting in its press release accompanying the meeting that it viewed recent economic data as likely to be “transitory.”6
  • Still, productivity is a critical factor in an economy’s longer-term growth potential, and the U.S. economy’s longer-term decline in productivity suggests that the so-called new normal of low growth and low interest rates is likely to remain in place for the foreseeable future.


1 U.S. Bureau of Labor Statistics, http://bit.ly/2pLGYC1.
2 Bureau of Labor Statistics via Macrobond.
3 U.S. Bureau of Economic Analysis, http://bit.ly/1DqcVBJ.
4 Federal Reserve Bank of St. Louis, http://bit.ly/2pdtoEh.
5 U.S. Bureau of Economic Analysis, http://bit.ly/2pKSpI2
6 U.S. Federal Reserve, http://bit.ly/2ph7vEa.


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