The Washington PostDemocracy Dies in Darkness

The U.S. economy just got hit with a disturbing piece of bad news

Maybe we haven't seen the full benefit of these newfangled technologies yet. (Kiyoshi Ota/Bloomberg)

Americans actually became less productive in 2016, the first time since 2009, according to government numbers released today.

The data show that multifactor productivity — economist shorthand for overall man and machine efficiency — dipped about 0.2 percent last year. This means that the 1.7 growth in the economy last year was entirely caused by companies hiring more people and buying more machines and software, not by improvements in technology or organization or anything else that allows companies to squeeze more out of the resources they have.

In other words, everything has, on average, actually gotten less efficient. Americans made more stuff in 2016 only because we had more people working and more tools for them to use, according to Thursday’s new report from the Bureau of Labor Statistics.

It’s not news any modern economy wants to hear, especially as the United States looks at a future of declining fertility and a shrinking workforce. If the nation wants more economic growth, it will quickly need to find ways of doing more with fewer people.

“Because of the aging population, we don’t have enough workers to have the economic growth we need,” said Michael Chui, a partner at the McKinsey Global Institute who studies automation and workforce trends. “To get there, we will need all the people working plus all the robots working.”

That is why productivity needs to grow, to create more advanced robots and artificial intelligences to underwrite future growth. Instead, last year, we went backward.

The drop is part of a recent worldwide trend of sluggish productivity growth among rich countries, and economists are still not sure why it’s happening.

Pessimists like Northwestern University’s Robert Gordon say that the benefits from computerization petered out in the 2000s, and since then the world has simply come up short on innovative new technologies.

Others blame the hangover from the recession, and they argue that some of this malaise will lift eventually. The latest data doesn’t look good on that front.

The change is small, and this may be a one-year blip, but healthy economies generally should not become less efficient. Economists have been concerned that productivity hasn't been growing fast enough. Now, in a non-recession year, productivity has actually gone down.

Optimists argue that we are in an incubation period and that the next wave of innovative breakthroughs is yet to come: We might not see the benefits from machine learning or smarter robots yet, but as these technologies start to spread, change could come rapidly.

This has happened in the past. Even in first few decades of the Industrial Revolution, the greatest economic change that has ever happened in modern history, productivity growth was slow and some historians believe that living standards temporarily fell. It took nearly half a century until breakthroughs like the steam engine made a real dent in people’s lives, when the technology was harnessed to power trains and generate electricity.

In the rosiest scenario, the world is on cusp of a similar transformation.

“Many of these new technologies are still in transition, I think,” said Pascual Restrepo, an economist at Boston University. “Let’s think about robots, for instance. To have robots, you need engineers. You need better software. But all those things are in short supply. There are still many bottleneck factors, so maybe you still don’t see the full impact on productivity — yet.”