U.S. worker productivity has risen faster in recent years, with a 2.5% year-over-year gain in the fourth quarter, outpacing the roughly 1% trend of the 2010s. But economists and policymakers remain wary of attributing the improvement to artificial intelligence. Federal Reserve Chair Jerome Powell cautioned that productivity booms are rare and often revised away. Barclays economists argue the acceleration is not definitive, noting a meaningful divergence between productivity measured by income and by output—gauges that should, in theory, line up. Separately, Pantheon Macroeconomics says AI may be exerting disinflationary pressure by lowering unit labor costs, but the longer-term impact hinges on whether AI proves labor-augmenting or labor-displacing. For now, stable payrolls in AI-exposed sectors hint at augmentation, supporting wages even as cost growth moderates. The upshot: early data suggest productivity is firming, but how much stems from AI—and how that feeds through to inflation and margins—remains unsettled.
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