From the end of 2000 to the end of 2003, productivity rose at a 3-1/2 percent annual rate and, even after recent downward revisions to the data, it is estimated to have increased at an average annual rate of 2-1/4 percent since the end of 2003.
These advances were achieved despite adverse developments that included the 2001 recession, the terrorist attacks of September 11, corporate governance scandals, and in the past few years, devastating hurricanes and very substantial increases in the cost of energy. Why is the rate of productivity growth so important?