In recent years, the United States has experienced a notable increase in labor productivity, outpacing other major advanced economies. According to RBC Wealth Management and Bloomberg data, U.S. workers have increased their productivity by 17% since 2014. In comparison, the eurozone and the UK saw gains of only 5% and 6%, respectively, while Canada's productivity has largely stagnated.
The rise in U.S. worker efficiency is seen as a significant factor contributing to the country's economic growth over the past two years. Between Q2 2022 and Q3 2024, U.S. real GDP expanded by 6.7%, compared to Canada’s 4.5%, the eurozone's 1.5%, and the UK's 1.4%.
Historically, U.S. workforce productivity has shown long-term improvement with a compounded annual growth rate of 2% since 1960, resulting in workers being approximately 250% more productive than their counterparts from that era.
Productivity growth rates have varied over time but are crucial for economic outcomes. A growth rate of 1.2% results in output per worker doubling every 58 years, whereas a rate of 2.5% achieves this in just 28 years.
Productivity serves as an engine for long-term economic progress by allowing economies to produce more with the same inputs, thus boosting business value per worker and enabling faster expansion without inflationary pressures.
The recent rebound in U.S. productivity is attributed to factors such as innovation culture, rapid business formation, technology diffusion, flexible labor markets, and high investment levels in research and development.
Generative artificial intelligence (GenAI) is highlighted as a potential game-changer for global productivity landscapes by offering opportunities for lagging countries to improve their productivity growth.