Latest / The Productivity Podcast with Fexingo: Output, Efficiency, and Long-Term Economic Growth
The Productivity Cost of Low-Growth Expectations
Episode 20 of The Productivity Podcast explores how the economy's long-term potential growth rate—often called r-star or the natural rate—has quietly fallen, and what that means for business investment and worker productivity. Lucas and Luna unpack a 2025 Federal Reserve study estimating that the U.S. natural rate of growth has dropped from about 3.2% in the 1990s to roughly 1.8% today. They discuss how lower expected demand discourages companies from making productivity-enhancing capital expenditures, creating a self-fulfilling cycle. The episode contrasts the post-war boom with current…
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