Detecting shifts in economic trends is difficult in real time, and most economists and policymakers did not fully appreciate the extent of the productivity slowdown until the late 1970s. This further influenced the policymakers of the time toward running a monetary policy that was too accommodative. The resulting overheating of the economy probably exacerbated the inflation problem of that decade.
9 Productivity growth revived in the mid-1990s, as I mentioned, illustrating once again the resilience of the American economy. 10 Since 1995, productivity has increased at about a 2-1/2 percent annual rate. A great deal of intellectual effort has been expended in trying to explain the recent performance and to forecast the future evolution of productivity.