Let's Be Optimistic About Productivity - Bloomberg View

Let's Be Optimistic About Productivity - Bloomberg View



Eight years after the beginning of the last recession, the economy is in much worse shape than was expected -- at least judging from the forecasts that the Congressional Budget Office published back in August 2007. As of 2015, nonfarm business output was 15 percent lower than forecast. About a third of this shortfall is attributable to people working fewer hours than expected.  The rest is attributable to businesses having a lot less physical capital (such as machines and software) than was anticipated, and having unexpectedly low total factor productivity (the productivity of labor and capital).