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Productivity growth has been the Achilles’ heel of the economic recovery in recent years. The good news is that The Conference Board economic team’s latest measures of productivity growth across 125 economies show some improvement for 2017 and 2018. Economists are debating how much of this improvement is related to the strong business cycle of the past two years. But with no recession in sight in the short term, greater investment in machinery and equipment as well as other business spending on innovation and automation may raise productivity further and help pay for the higher wages resulting from labor markets that are beginning to tighten.
While we do not want to overstate the impact of the current productivity recovery on overall economic growth, the bigger risk is that we miss what is happening in our companies and sectors across the economy. So in this month’s newsletter you will find some key insights and references regarding our recent work and upcoming activities in productivity.