Productivity Boom, Redux

January 28, 2026

There was a very interesting chart from Apollo’s chief economist this morning.  See below.  An important concept in economics is “productivity” – that is, output per hour. 

At its most basic level, GDP is a function of “total hours worked” x “output per hour”. 

Based on the recent jobs data, we know that the growth in total workers is barely positive at the moment.  However!  GDP can still grow if the second half of the equation is growing.  The output per hour.  In other words, the productivity part of the equation.  And that’s what folks are focused on at the moment.   The latest datapoint we have is for the September quarter, where productivity grew +4.9% versus the prior quarter.  Over the last 20 yrs or so, productivity grows 1.5-2.0% on average.  (You can see that in the chart below.)  So we’re rising at the moment.

What’s driving that?  Well, we don’t know for sure. 

It’s probably a lot of things, including more “working virtually”, “cloud computing”, and of course … AI.  There are significant productivity benefits from AI in the software development space, robotic automation, and content management systems.  However, the research into how much exactly these are contributing to overall economic growth is unclear. 

In the chart below, the economists at Apollo are comparing it the early stages of the productivity booms from PCs and the internet.  Speaking only for myself, I can see how AI has a massive impact change on several white-collar industries, much like the internet did by diversifying and democratizing access to information.

In Powell’s speech later, we will listen for comments on this topic.