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Is High Productivity Growth Returning?

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Productivity growth has shown a notable pickup since the fourth quarter of 2019, and some commentators cite artificial intelligence and other factors as reasons why technological progress can sustain this faster pace. Motivated by this consideration, we use a model designed to detect trend shifts to examine the behavior of productivity growth in the postwar period. The model allows for shifts between high- and low-growth productivity regimes and estimates the probability of being in one regime or the other. We find that recent data provide tentative support for a higher trend growth rate, with the model estimating about a 40 percent probability that the economy is in a high-growth productivity regime.

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  • Alexander Cline & James A. Kahn & Robert W. Rich, 2025. "Is High Productivity Growth Returning?," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2025(01), pages 1-12, January.
    • Handle: RePEc:fip:fedcec:99453
    DOI: 10.26509/frbc-ec-202501
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    1. Michele Lenza & Giorgio E. Primiceri, 2022. "How to estimate a vector autoregression after March 2020," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(4), pages 688-699, June.
    2. Kahn, James A. & Rich, Robert W., 2007. "Tracking the new economy: Using growth theory to detect changes in trend productivity," Journal of Monetary Economics, Elsevier, vol. 54(6), pages 1670-1701, September.
    3. James A. Kahn & Robert W. Rich, 2006. "Tracking productivity in real time," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 12(Nov).
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