The US economy is currently experiencing shortages in key inputs such as chips and labour that are delaying the recovery. Yet exceptional productivity growth could make the Bloomberg survey forecast for 2021 GDP above 6% achievable.
The pandemic is unusual in many aspects, especially for the behaviour of employment and productivity growth (Chart 1). In a typical recession, labour productivity growth and hours worked fall in the down phase as firms adjust labour by less than sales. They do this, for instance, because they know that rehiring workers after the recession will be costly. Consequently, in the recovery, firms typically increase employment with a lag relative to their sales increase. As a result, productivity goes through a cyclical recovery before reverting to trend.
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