Two of the most important facts about the global economy over the last decade are these: A giant financial crisis led to mass unemployment in many countries and years of disappointing growth. And despite a seeming barrage of technological innovation, productivity growth has been the weakest in decades.
Maybe it’s not a coincidence.
That is the provocative conclusion of new research from the McKinsey Global Institute, the in-house think tank of the consulting giant, that suggests we should change how we think about the advancements that make society richer over time. It implies that as the economy returns to full employment, an outburst of faster growth in productivity — and hence economic growth — is a real possibility.
This idea should excite both conservatives and liberals.
It suggests that the Trump administration’s ambitions for faster growth driven by rising productivity aren’t as outlandish as warier forecasters have argued. And it tends to back arguments by liberal-leaning commentators that the Federal Reserve ought to move cautiously in raising interest rates, in hope that the economy will more fully repair itself from damage caused by the 2008 recession and its aftermath.
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