GDP growth can be broken down into two main drivers: growth in output per worker and growth in the number of workers. Historically, the balance between these two factors has varied significantly from decade to decade, with economic growth sometimes driven more by productivity and other times by labor-force expansion. So far this decade, however, the difference is striking. From 2020 to today, approximately 1.8% of annual GDP growth has come from higher output per worker, compared with just 0.4% from growth in the number of workers. Working population growth has slowed compared with previous decades, making productivity increasingly important to economic growth. At the same time, output per worker has continued to rise at a strong pace. The recent acceleration in productivity may be an early sign of the impact of AI implementation.
Source: Guide to the Markets; Average year-over-year % change
This graph was produced by Lucas Juery, CFA, CFPⓇ and is not intended to provide financial advice.
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