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Chart du Jour, 8 April 2015: The Problem with Productivity

The UK is in the midst of a productivity panic. The country has exhibited a solid economic recovery measured in terms of GDP, but not one in terms of being able to do more with less. In short, the country is pumping out a larger amount of stuff and services because a) more people are working and b) those who are working are putting in longer hours.

Likewise, the US faces a similar productivity conundrum (if not quite so pronounced). Take this chart from the Federal Reserve Bank of Atlanta (here, click for larger image):

Labour Productivity jpeg.

The US appears to be productivity-challenged as well. And productivity is the thing that is supposed to make us rich (sort of). What is going on? Well, we could surmise that we are suffering from the early symptoms of diminishing returns to technology, an idea advanced by the growth economist Robert Gordon (see here).

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