April 12, 2021

THANKS, COVID!:

Post-pandemic America: gloomy or boomy? (James Pethokoukis, 4/12/21, Fastrer, Please!)

[A]s it turns out, the pandemic gave productivity growth a big boost last year -- at least as measured by output per hour. It was up 2.5 percent last year, the best performance since 2010. Why? As Moody Analytics economist Mark Zandi explains: "The pandemic crushed lower value-added industries such as brick-and-mortar retail and travel and lifted higher value-added online and technology businesses." Of course, there are probably also instances of companies using the cover of the pandemic to finally adopting labor-saving tech.

Zandi thinks there's more good news on the way that could give productivity growth a sustained boost:

But last year's increase in productivity seems also to reflect a more persistent revival in trend productivity growth. Trend productivity growth was stuck in the post financial crisis expansion at just over 1% per annum, almost a percentage point below the 2% growth experienced in the previous 60 years since World War II. Indeed, we expect trend productivity growth to re-accelerate post-pandemic given the accelerated move online, more judicious business travel, and work-from-anywhere. We are also counting on a more fulsome adoption of promising labor-saving technologies such as machine learning, cloud computing, lidar and drones that have long been percolating. The long-running drag on trend productivity from the aging of the population should soon be easing, and an anticipated large infrastructure program, up next on the Biden administration's economic policy agenda, will also add to productivity.

Posted by at April 12, 2021 12:00 AM

  

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