It may seem paradoxical that productivity growth – which in the longer term is the most important source of increases in real wages and living standards – can have adverse consequences for employment in the short term. But, when the demand for goods and services is growing slowly, that may be the case.
4  Shown in Gramlich, "Budget and Trade Deficits." 2  BIS Review 14/2005  long upswing in the 1980s. The United States ran fairly large primary surpluses in the 1990s, enough so to inspire talk of paying off the entire outstanding federal debt. But that brief period of good fortune has passed; primary deficits are back, and the debt-GDP ratio is rising again.