Nov
14

Puzzling Productivity

Near steady job growth in an economy that’s meaningfully slowing is odd. Shouldn’t employment growth decline too? I think several factors are at work. Our economy is increasingly service oriented and efficiency gains in that giant sector are limited; relatedly more lower productivity jobs are being created. And most importantly, corporate investment was about 2.7%/year from 1998-2008 but just 1.7% since, and that boosts employment demand by reducing productivity growth.         

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