Rekindling US Productivity for a New Era

Key Highlights

• Regaining historical rates of productivity growth would add $10 trillion to US GDP — needed to confront workforce shortages, debt, inflation, and the energy transition.
• Labor productivity growth has been the engine of US economic power since WWII, adding 2.2% annually. But in the past 15 years it has averaged just 1.4% — a paradoxical slowdown during a boom era in digital technology.
• Seven leading states drive outsized productivity: California, Colorado, Massachusetts, New York, North Dakota, Texas, and Washington — providing nearly 1/3 of jobs and 40% of GDP.
• “Frontier firms” in the productivity vanguard invest 2.6x more in technology and intangibles and attract more skilled talent.
• Evidence that firms within the same sector may coexist without fully competing, by serving different customers, different workers, or different geographies — explaining why laggards aren’t replaced.
• Cities matter enormously: Seattle was 16% more productive than other cities in 2007 and 38% more productive by 2019. #City Building
• For net zero, investors will need to pump in an additional $1.7 trillion annually until 2050.
• Biggest challenges: insufficient skilled labor supply, uneven technology adoption, stalling investment.
• Frontier firms “freed their top thinkers, engineers, and creatives to work on their toughest problems, and supported them with technology and other intangibles, experienced outsize returns.”