Fed chief optimistic about America's productivity

Published: Friday, September 1, 2006 at 6:01 a.m.
Last Modified: Thursday, August 31, 2006 at 11:33 p.m.
America's productivity probably will keep growing solidly for some time to come, an important force in bolstering living standards, Federal Reserve Chairman Ben Bernanke said Thursday.
Although future productivity gains can be difficult for economists to forecast, Bernanke offered a largely optimistic case that the country will continue to log good efficiency gains over the long term. He said recent figures showing a short-term slowing in productivity didn't change his view.
"A case can be made that the strong productivity growth of the post-1995 era is likely to continue for some time," Bernanke told an economic and development conference in Greenville, S.C. A copy of his remarks was made available in Washington.
Since 1995 productivity has been growing at a significantly faster rate than it had in the previous two decades, when efficiency gains had been sluggish.
Between 1995 and 2000, productivity growth was about 2 percent a year, Bernanke noted. In contrast, from the early 1970s until about 1995, productivity growth averaged about 1 percent a year, he said.
Big investments in computers and other productivity-enhancing equipment has played a role in the productivity improvements. Companies have yet to reap all the benefits of their previous investments in such productivity-enhancing technology, Bernanke said. That's part of the reason why he is mostly bullish about future gains.
Competition, the flexibility of U.S. companies to easily add and shed workers, and other factors also have contributed to the efficiency improvements.
And U.S. workers - from auto mechanics and factory workers to scientists and engineers - have done their part by, among other things, learning how to use new technologies that sharpen their productivity.
To make sure that good productivity gains are logged in the future, it is crucial that "we have a work force that is comfortable with and adaptable to new technologies," he said.

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