I am not feeling that productive right now, as evidenced by the fact that this is my first newsletter in a month. The first couple weeks went haywire thanks to Covid; the last couple thanks to onerous new testing and prep rules at work. I have to imagine lots of you feel the same way.
Or maybe not! The productivity hit from Omicron may turn out to be relatively small if the variant actually accelerates the digitizing and work-from-home trends that Goldman says are delivering massive productivity gains right now.
"The sheer scale of pandemic-driven changes to the workforce and to company business models...argues for a large and long-lasting productivity inflection" to the upside, the firm wrote in a report this week. This is great news--productivity gains were so sluggish during the last expansion that it engendered a whole crop of literature about our "Great Stagnation."
From a measly 1% annualized last cycle, productivity has already averaged 1.7% over the past two years, per Goldman. That's a big deal--the whole point of productivity is to see if we can deliver a higher GDP with the same amount of resources, which helps increase society's standard of living over time.
And Goldman thinks these gains can last--and perhaps even rise in the next couple years--as the pandemic has reshaped work in America. "These changes include 600 million fewer hours spent commuting every month, as well as possibly 1.4 million fewer cashiers, in-person salespeople, and office maintenance staff." They add that $1.2 trillion of home offices and computing equipment is "now available for business-sector use"--a huge savings that comes from not having to duplicate setups.
Contra the persistent concerns that technology is taking away jobs, Goldman notes that technology is creating more jobs, in different--and perhaps more desirable--industries. "Many of these workers and hours will be reallocated to more productive uses--especially at a time of persistent labor shortages and near-record job vacancies," the firm's chief economist, Jan Hatzius, wrote.
All told, Goldman foresees a "persistent boost" to productivity levels from here. That should help the economy power through continued labor shortages, "implying a longer runway for expansion." And perhaps most crucially, stronger productivity implies lower inflation pressures over the next couple years as well.
So there's your glimmer of hope as we muddle through another season of Covid. You like your work-from-home job, there's a stronger chance you can keep it. You don't like self-checkout? Well, now's a good time to get used to it. As unproductive as we all might feel lately, there's actually a strong chance society as a whole will benefit in years to come from these trends.
See you at 1 p.m!