Investment
After the pandemic recession, the right policy decisions resulted in a strong recovery and laid the foundations for another era of sustained productivity growth, similar to the 1990s. Sadly, in 2025, new policies are actively working against that dream.
After taking into account data revisions and the Q3 GDP release, productivity growth is running stronger in the post-pandemic period, at about a 2% annualized pace. This stands in contrast to the sluggish ~1.4% pace observed in the pre-pandemic period. We've been productivity optimists for some time
Today's data largely confirmed what we've known for some time now: the Fed's restrictive policies are restricting the level and growth of homebuilding activity in the US economy. But when we think holistically about the relevance of homebuilding to price stability, the restrictive effects
In this piece, we take a deeper dive into the finer details of the national accounts to gain some insight into how exactly monetary policy is restricting investment.
Overall, the Q1 GDP print looks weaker overall than the previous print, with investment growth correspondingly weaker.
Whether or not we see another boom in productivity is a question of policy, not a question of fate.
Tight labor markets and strong investment are crucial to securing the three-legged stool of productivity growth, but a stable supply of the essentials may be the most important to focus on today.
The second leg of the productivity growth stool is a boom in fixed investment. This is the heart of productivity growth in many ways, and is critical to achieving disinflationary dynamics over the medium term.
