Goldman: The Productivity Paradox

In a recent report from Goldman Sachs, analysts bring up an interesting discussion on US productivity. Basically, the current productivity numbers may be understating the contribution of information technology. Goldman calls this the ‘productivity paradox’. Current productivity numbers show growth at 1.5%, below the long-term average of 2.25%. Drilling down into those numbers shows the weakness is due to contributions (or lack thereof) from information technology. However, Goldman suggests the numbers don’t accurately measure certain aspects of the IT sector. Analysts believe output from digital content and software may be difficult to measure, resulting in lower than actual productivity. As such, employment numbers may be a better gauge of economic strength than GDP/productivity growth figures. (VIEW LINK)