Rising markups and intangible capital mismeasurement dampen US productivity growth.
The decline in measured productivity growth in the US is due to two main factors: underestimating intangible assets and increasing markups. Markups affect how resources are used, while intangibles not included in investment measures impact capital growth, leading to lower productivity growth. When both factors are at play, they reinforce each other, causing a significant drop in measured productivity growth. This combined effect could explain up to two-thirds of the decline in productivity growth.