A Growth-Accounting Perspective on the Post-Pandemic Economy

rate of the nation’s real (inflation-adjusted) gross domestic product (GDP). For example, the profitability of firms and, therefore, trends in stock prices will depend in good part on this growth rate, as will the average tax rate we pay. Lower tax rates also tend to create more incentives for work and investment, both of which promote higher economic growth. The long-run growth rate of real GDP itself depends importantly on the growth rate of labor productivity, or output per hours worked. Labor productivity growth over time depends on several factors, such as technological improvements and additions to the capital stock. The Bureau of Labor Statistics reports nonfarm labor productivity, a commonly used measure of output per hours worked.