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Posted by: Michael Mandel on September 14
As part of my latest piece on Fed policy, I asked several top economists for their forecast of long-term productivity growth. The exact question for the mini-survey was:
What do you think the sustainable rate of productivity growth is likely to be over the next few years? (I’d prefer a single number, but a range would be okay too)
This is obviously a key question for Fed policy, forecasts of future tax revenues, U.S. competitiveness, American well-being, and basically anything that has to do with the future. High numbers are good, low numbers are bad.
The current mini-survey shows that the range of answers has compressed (see below). The forecasts now run from 2.25% to 2.5%. I didn’t do an average, since the range was so narrow.
But that’s still pretty good. The long-term historical average since World War II is 2.2%, the ten year average is 2.56%.
The one cautionary note, which I raise in the story, is that long-term productivity trends can shift unexpectedly. And the recent slowdown in reported productivity does worry me.
|The Productivity Consensus|
|Expected long term productivity growth|
|Hal Varian||2.5||University of California at Berkeley|
|Alan Krueger||2.5||Princeton University|
|Dale Jorgenson||2.4||*||Harvard University|
|Bill Nordhaus||2.3||Yale University|
|Martin Baily||2.25||Brookings Institution|
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.