| I've written about this topic several times in recent years, but it's so important that I feel the need to revisit it every now and again. And now is a particularly good time to do so (more on that in a moment). First, a few fundamental questions about the economy and markets: - What raises everyone's living standards?
- What allows workers to put in fewer hours but make more money?
- What keeps inflation low and stable?
- What makes companies more efficient and more profitable (and drives their earnings and stock prices higher)?
- What brought us the two-day weekend and, for many, the 35-hour work week?
Yes, there's one answer to all of these: productivity. Here's how Bernard Baumohl puts it in The Secrets of Economic Indicators, his authoritative guide to economic data... What single feat allows an economy to grow faster without any inflation, helps U.S. exporters win markets overseas, and enriches both households and corporations simultaneously? The answer is productivity growth. Baumohl is right on the money (as usual). And we learned this month that productivity is soaring right now. Productivity, defined as employee output per hour, rose at a 3.2% pace in the fourth quarter. That came after it surged 4.9% in the third quarter. Here's a 10-year chart of labor productivity for U.S. workers, courtesy of the Bureau of Labor Statistics and the Federal Reserve Bank of St. Louis. You can see that, after stagnating for a couple of years, it turned up at the beginning of 2023 and is headed sharply higher. | 
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