Chart Insights
Is the Productivity Cycle Turning?
Long-run productivity has historically moved in waves, and the current one may be inflecting.
Labor productivity (output per hour) is the headline measure, while utilization-adjusted total factor productivity (TFP) clarifies underlying efficiency, to distinguish true efficiency gains from temporary effects.
The 1995–2004 Internet and IT boom delivered broad based gains, with labor productivity ~3.0% CAGR and utilization-adjusted TFP CAGR ~2.0%.
Since 1990, productivity has moved in multi-year waves, peaking in the early-2000s and bottoming in the mid-2010s post-GFC trough.
Since 2020, labor productivity has reaccelerated above its long-term average; TFP has improved but remains well below prior highs, suggesting sustained TFP strength is needed for a durable AI-led shift.
Labor Productivity vs. TFP (7-year trailing CAGR): 1990-2025
Note: Lines show 7-year trailing CAGR. Shaded figures show period CAGR of the underlying level series.
Source: U.S. Bureau of Labor Statistics (BLS), Labor Productivity and Costs (Nonfarm Business Sector output per hour); Fernald, Federal Reserve Bank of San Francisco
(utilization-adjusted TFP); Aristotle Capital Management, author calculations. As of 2025Q4.
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