More Gains in Productivity Likely, Fed Official Says
Careful analysis of the surge in U.S. productivity growth in the second half of the 1990s suggests the gains aren't simply the result of strong overall economic growth, Federal Reserve governor Edward M. Gramlich said yesterday in a speech in London.</br></br>Instead, the new, higher rate of growth in productivity -- the amount of goods and services produced for each hour worked -- appears likely to last even as economic growth slows, Gramlich said.</br></br>After the speech, he told reporters that U.S. productivity growth was still accelerating in the first nine months of last year, the Dow Jones news service reported. When economic growth slowed in the fourth quarter, productivity growth did as well, but only modestly.</br></br>"So it looks like productivity is hanging in there even with our slowdown," the Fed board member said.</br></br>Gramlich told the International Bond Congress that numerous studies indicate that the long-term trend in productivity growth increased in the United States from about 1.5 percent annually during the two decades from the mid-1970s to the mid-1990s to about 2.5 percent more recently. That acceleration was caused primarily by two things, he said.