Since the middle of the 1990s, productivity has increased by just about 2 percent a year. Many economists believe that the official productivity numbers have been understated, particularly in the service sector of the economy. Even the Bureau of Labor Statistics, which produces these statistics, has recently admitted problems in estimating productivity in the service sector. The biggest challenge is in estimating inputs and outputs in the production of services. For example, it may not be possible to define medical output adequately without considering whether the patient follows the doctor's advice, or ignores it.
Similar issues arise in the fields of education and entertainment.
T-Bill rates are bond equivalent yield. All figures are quarterly or yearly averages, rounded to one decimal point. This may seem like a small issue, but it has huge implications. If, in fact, productivity is growing at 3 percent not 2 percent, then the economy could continue to grow at a 4 percent pace without risking an increase in inflation. That 1 percent difference on an eight trillion dollar economy adds up to a lot of additional output and income over time.