Top Highlights

• The figure above illustrates the contributions total factor productivity growth in the business economy from wholesale and retail trade, manufacturing, and all other industries. Three-year moving averages are used to smooth out very short-term variations, although a lot of variability remains. From the 1990s through 2008, manufacturing and wholesal...
• One explanation for slow productivity growth is that we are running out of ideas, although this view runs counter to the constant release of new technology and new products. Accounting for changing innovation in productivity data is difficult, which could explain the slow productivity growth. Health care (over 17% of GDP) is an example where very l...
• This meant that the techniques of data mining and trial and error became extraordinarily powerful. A sample of what AI is already doing in companies includes checking for anomalies in hard disks, assisting with legal and compliance analytics, and fraud detection. These and many other examples are described in Davenport and Mittal (2023).
• There is evidence that generative AI can improve the productivity of less-skilled employees within an occupation or organization. Case studies show that genAI increased productivity of call center customer support agents, software developers, and mid-level professionals.
• AI is having an impact now, but most of its effects will occur in the future and are uncertain. To get at the potential for AI-driven productivity improvements ahead, AI can be compared to past major technology breakthroughs. Economists use the term general purpose technology (GPT) for an innovation that has widespread application across the econom...

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