Over the last two years, there has been a notable increase in U.S. productivity growth. For example, in the third quarter of 2025 (the most recent quarter for which data is available), the four-quarter growth rate of real output per hour in the non<a href="https://bitcomme.com/virtra-reports-second-quarter-and-six-months-2026-financial-results/” title=”VirTra Reports Second Quarter and Six Months 2026 Financial Results”>financial corporate sector was 3.8 percent. That is more than twice the 1.8 percent average rate at which output per hour grew over the last 25 years. Many analysts have linked this increase in productivity growth to advances in artificial intelligence (AI), and there is an active debate about whether this higher productivity growth will continue.
The high productivity growth of the late 1990s often comes up in this debate. Then-Federal Reserve Chair Alan Greenspan’s views about the implications of productivity growth for monetary policy were widely publicized during that time. Less well known are the contributions that the late Al Broaddus — then-president of the Richmond Fed — made to Federal Open Market Committee (FOMC) discussions about these issues. Broaddus’ recent passing makes this an especially appropriate time to advertise those contributions to a wider audience. I’ll begin by giving an overview, then provide a chronological tour through his contributions.
Setting the Stage
What are the implications for monetary policy of a sustained increase in productivity growth? This question took center stage in the late ’90s, as evidence accumulated that the rate of productivity growth had increased. At that time, the higher observed productivity growth coincided with a period of unusually rapid technological advancement related to the internet and the telecommunications industry more broadly.1
Figure 1 shows the growth in real output per hour in the nonfinancial corporate sector, which serves as a measure of aggregate productivity. From 1971 through 1995, the annualized growth rate was 1.9 percent, but that growth rate rose to 3.1 percent in the following four years.
