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Total Factor Productivity

 

Summary

Over the past four quarters ending in the second quarter of 2012, Total Factor Productivity grew at a rate of 0.6% and Utilization-adjusted Total Factor Productivity grew at rate of 0.6%.

Total Factor Productivity and Underlying Variables

Quarterly growth rates, annualized
Variable2011:Q32011:Q42012:Q12012:Q2
TFP-1.9%4.4%0.7%-0.8%
TFP Utilization-adj.-0.9%4.7%0.3%-1.5%
Output0.7%5.5%3.9%1.8%
Capital Input1.2%1.7%1.8%1.8%
Labor Productivity-0.5%3.0%0.6%1.7%
Utilization-0.9%-0.3%0.4%0.7%

Announcements

  • You can now get updates on Total Factor Productivity from the San Francisco Federal Reserve's Twitter page. If you are interested, please see our E-kiosk. More information on this feature: Twitter.
  • Data and estimates are subject to revisions.

Methodology/References

About

This site presents a real-time, quarterly series on total factor productivity (TFP) for the U.S. business sector, adjusted for variations in factor utilization - labor effort and capital's workweek. The utilization adjustments follows Basu, Fernald, and Kimball (BFK, 2006). Using relative prices and input-output information, the series is also decomposed into separate TFP and utilization-adjusted TFP series for equipment investment (including consumer durables) and "consumption" (defined as business output less equipment and consumer durables).

Labor includes an adjustment for "quality" or composition. Capital services are also adjusted for changes in composition over time (e.g. computers, other equipment, structures, and inventories).

The adjustment for variable utilization in the quarterly series follows Basu, Fernald, and Kimball (2006). BFK sought to adjust for a range of non-technological factors that affect measured TFP, of which variations in the utilization margin - i.e., the intensity margin for the workweek of capital and labor effort - are only one. (Reflecting limitations in quarterly data, other corrections that are not implemented in the quarterly series include allowing for deviations from perfect competition and for various reallocation effects). Nevertheless, the utilization-adjusted quarterly series is an improvement over more "naive" measures of TFP as a high-frequency indicator of technological change.

Data Download

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