Must-read: Nick Bunker: How concerned should we be about business investment and productivity growth?

Must-Read: Non-residential investment is not that low given the low-pressure economy. In fact, on some measures, business equipment and structures investment is relatively high.

FRED Graph FRED St Louis Fed

It’s residential investment and productivity growth that appear to me to be disappointingly low. The first is due, in some part at least, to administrative malpractice on the part of the Obama Treasury. The second is a puzzle , for it is a lot lower than could be plausibly accounted for by lower business investment…

Nick Bunker: How concerned should we be about business investment and productivity growth? – Equitable Growth: “The changes in business behavior in recent decades…

…are factors in the recent slowdown in productivity growth. But how concerned should we be about these trends? Are they cyclical problems that will soon be corrected? Or are they deeper structural changes we should grapple with more?… Jason Furman… provide[s] a good starting point…. He points out that since 2010 the decline in labor productivity growth in the United States has been driven mostly by a… slowdown in business investment…. How do we boost business investment?… [The] ‘accelerator’ view of the slowdown makes sense…. What are firms doing with all these profits they’re earning and not investing, then? The data show that a large chunk of these profits are being distributed to shareholders in the form of increased dividends and stock buybacks…. Declining business investment and dynamism, insomuch as they are affecting productivity growth, should concern policymakers and everyday Americans. Stronger productivity is a necessary requirement for higher living standards…

April 15, 2016


Brad DeLong
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