productivity, in economics, the output of any aspect of production per unit of input. It is a measure of the output of a worker, machine, or an entire national economy in the creation of goods and services to produce wealth. Output can be measured in output per acre for land, per hour for labor, or as a yearly percentage for capital. A high national productivity typically indicates efficient production of goods and services and a competitive economy, but productivity growth can occur during periods of recession and increased unemployment as businesses cut jobs and seek to become more efficient. Productivity gains in the United States have, since the late 1940s, averaged around 2%. Productivity rose an average of 2.5% each year in the 1950s and 60s, then only 1% per year during the 1970s and 80s. Low industrial productivity (especially in the automotive industry) in the United States was a major concern in the 1970s and 80s, as Japanese innovations in assembly lines and other manufacturing operations led to greater productivity gains in there; Japan's resulting competitive edge led to increased exports to the United States and was a factor in the downturn in U.S. business in those decades. During the 1990s and 2000s manufacturing productivity increases averaged 4% (overall nonfarm productivity was 2.2%), but during much of the decade American productivity increases were matched or surpassed by those in many European countries and Japan. Average U.S. productivity increases were even higher until the Great Recession (2007–9), and then dropped significantly.
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