Multifactor Productivity Growth
With the unemployment rate near its historic low and the labor force expected to grow only about 1% in the near future, increased productivity could be the key to preserving the U.S. economy’s robust, noninflationary GDP growth. Labor productivity (output per hour) is the statistic most often cited because it is easily calculated and is available quarterly. It is also the best measure of the potential reward to labor and average living standards. However, labor productivity is not the best measure of technical change because it can grow for other reasons, such as increases in the ratio of capital to labor (called capital deepening) or improvements in labor quality.
Suggested citation: "Multifactor Productivity Growth," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-04, pp. 15-17, 04.01.1999.