The Future of the Dollar
U.S. Financial Power Depends on Washington, Not Beijing
The white heat of technological progress can be blinding. It has taken less than a lifetime to go from the birth of computing to the first self-driving cars, not to mention the stream of game-changing breakthroughs in science and medicine in between. Yet these high-profile successes mask a problem. Since 2005, annual U.S. total factor productivity growth (which measures the efficiency with which labor and capital are used) has averaged around 0.5 percent, down from an average of around 1.75 percent from 1996 to 2004. That has hurt economic growth, which remains sluggish nearly a decade after the end of the Great Recession.
The slowdown has sparked a debate among economists over the sources of the problem. Are statisticians mismeasuring—and thus underestimating—output? Is the United States mired in “secular stagnation”—a prolonged period of low economic growth caused by too much saving and too little investment? Or are recent innovations simply not