When the labor cutbacks catch up with the production cuts, productivity should come back a little. Of course, unemployment will continue to rise until companies are able to return to profitability. As technology advances, these investments will continue to pay off, and companies will start making them again. But not for a while. Because companies will be waiting until they're absolutely sure that the economy has recovered before they make those technological investments again.
Capital investment works sort of like traffic.
When the economy is moving at 90 miles an hour like it was in the second half of the decade, everybody's driving fast and making big investments. At that speed, a lot of mistakes get made, and they're very costly ones. There's a herd mentality to capital investment. Everybody's looking at what the competition is doing, and until the economy starts to speed up again, nobody's going to make any big new outlays that will get overall productivity going again. Most likely, this is merely cyclical.