New York Fed economists James Kahn and Robert Rich have a new model for estimating productivity growth in "real time." Real time in this case still implies a year or two lag. However since productivity growth is notoriously volatile, there will always be the possibility that a change in trend will remain hidden for several quarters. The results do look promising. They suggest that we are still in a high productivity growth regime. A big tip of the hat goes to Mark Thoma for the pointer. I'm posting the link in light of my comments yesterday in which I worried aloud that slower productivity growth could make it harder for the Fed to fight inflation [cf. the recent argument that an undetected productivity slowdown caused the Fed to follow a more expansionary policy than they should have in the 1970s]. Chalk this up as evidence that it may be premature to announce the end of this period of high productivity growth that began (or rather, resumed) in the 1990s. I certainly do hope they are correct.
Tracking Productivity in Real Time, by James A. Kahn and Robert W. Rich
UPDATE: Bill Conerly points to a post of his from about a month ago where he said this:
What we see in last quarter's data is the weak GDP growth more than an underlying trend of weak productivity. In fact, long-term trends are the only way to really see what's happening in productivity. Unfortunately, it's hard to catch the first signs of a change in trend productivity. However, the actual data are consistent with the same old underlying trend productivity growth, plus a weak quarter of GDP. That's a judgment call, not hard science, but I feel very comfortable with this call.
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