Looking Forward

We continue to forecast real GDP growth of 2.5% this year, but improved productivity growth could boost that to 3.0% as well as help keep inflation in check. In fact, we see a revival of productivity growth over the rest of this decade that keeps labor cost inflation close to 0% as well as supports inflation-adjusted wage growth, boosting consumers’ purchasing power. In both those ways, a productivity boom can be an engine of economic growth. That’s our Roaring 2020s scenario. … Also: Recently released employment statistics that hard-landers say supports their recession outlook might actually reflect the shortage of labor, in our opinion.