Fed's Williams: Productivity shifts hard to spot in real time

Federal Reserve Bank of New York President John Williams said Thursday it’s hard to spot fundamental shifts in the level of productivity as they are happening.

“Real-time identification ‌of ⁠structural change ⁠is extraordinarily difficult, and expectations of future growth tend to adjust gradually to changes in underlying productivity growth,” Williams said in the text of a speech prepared for delivery before the Reykjavík Economic ⁠Conference in ‌Iceland.

“As a result, in the initial stages following a shift, ⁠the economy is likely to behave more like a temporary increase in productivity growth than a permanent one,” Williams said. He noted that a shift higher in productivity can raise the real interest rate that prevails in ‌the economy.


Williams did not comment on the near-term monetary policy and economic outlook in ⁠his prepared remarks.

The U.S. has seen of late accelerated levels of productivity amid an active debate as to why that's happening and what it could mean for the stance of monetary policy going forward.