2Center or American Progress | Measuring Future U.S. Competitiveness
U.S. productivity snapshot
Past investment (17-year lag) and current productivity growth
Source: Author’s calculations of BEA and BLS data.
D e c - 7 0 D e c - 7 2 D e c - 7 4 D e c - 7 6 D e c - 7 8 D e c - 8 0 D e c - 8 2 D e c - 8 4 D e c - 8 6 D e c - 8 8 D e c - 9 0 D e c - 9 2 D e c - 9 4 D e c - 9 6 D e c - 9 8 D e c - 0 0 D e c - 0 2 D e c - 0 4 D e c - 0 6 D e c - 0 8 D e c - 1 0
Labor productivity growth rate
Investment rate(ﬁve-year average, share of GDP)
Investment (17-year lag)Output per hour (ﬁve-year average)
domesic produc, lagged 17 years. Ta is, any poin on he horizonal axis shows he conempo-rary produciviy growh and he invesmen raerom 17 years beore. Lagging invesmen indicaesa clear causal relaionship: Invesmen leads ohigher produciviy growh in he long run.
Investment is at the lowest level in four decades
Business invesmen has averaged 10.3 perceno gross domesic produc in his business cycle,rom December 2007 o December 2010. Tis ishe lowes average or any business cycle since he1970s. Low invesmen is no due o he cos oravailabiliy o capial. Ineres raes on corporae AAA bonds sand a jus more han 5 percen, helowes persisen ineres raes since 1966.
Andhe nonnancial business secor is holding more han $1.9 rillion in cash, oaling7.4 percen o oal corporae asses in he hird quarer o 2010—he highes levelsince he ourh quarer o 1959.
Investment is barely keeping pace with capital depreciation
Ne invesmen (invesmen minus depreciaion) has averaged 1.5 percen o GDP inhis business cycle, beween December 2007 and December 2010. Tis is he loweslevel since he 1940s and less han hal o he nex lowes average, 2.5 percen, ha wasrecorded rom March 2001 o December 2007.
Productivity growth lags behind previous business cycles
Produciviy growh ypically increases during a recession and early in a recovery.Produciviy growh or he rs 12 quarers o his business cycle, rom December 2007o December 2010, oaled 7.6 percen, below he average o 8.5 percen or he previ-ous eigh business cycles lasing a leas hree years.
Domestic innovation is down
Te number o uiliy paens (paens graned or he invenion o “new and useul” ormaerial improvemens o processes, machines, or maerials) graned by he U.S. Paenand rademark Oce in 2009 did rebound rom recession-year lows in 2008, jumping