This report from McKinsey explores trends of slowing labour-productivity growth in the United States and Western Europe since the 1960s and further deceleration after the financial crisis to historic lows. The report sheds light on this productivity puzzle and outlines prospects for future growth by examining: (1) how micro patterns offer additional insight into the aggregate productivity slowdown; (2) why productivity growth is declining in advanced economies; (3) what a sector view reveals about the slowdown and outlook; and (4) how to capture the 2% or more productivity potential of advanced economies.
The findings suggest that how strong the recovery is, will depend on the ability of companies and policy makers to unlock the benefits of digitisation and promote sustained growth. A dual focus on demand and digitisation could unleash a powerful new trend of rising productivity growth of at least 2% a year that drives prosperity across advanced economies for years to come.