I hope “New Roaring Twenties” becomes a hashtag more like #GreatStagnation rather than #InfrastructureWeek. And by that I mean #NewRoaring20s becomes sincere shorthand for describing something real and important rather than something that could have been important — but turned into a joke. (Well, until recently, that is.)

Some evidence for that former scenario can be found in “The U.S. could be on the verge of a productivity boom, a game-changer for the economy” by ace Washington Post reporter Heather Long. After highlighting the recent upsurge in the productivity stats — labor productivity grew 4.3 percent in the first quarter and 2.3 percent in the second, versus an annual average of just 1.2 percent since the Global Financial Crisis — Long explains why some analysts think a level of acceleration might stick around: “The optimism this time derives partly from Congress and the White House taking steps to make significant investments in physical and digital infrastructure, and partly from the coronavirus pandemic forcing rapid and widespread adoption of the digital economy, robots and artificial intelligence.”

One of the many interesting bits of evidence in Long’s richly reported piece highlights how AI machine learning is diffusing more widely into the economy. She notes, for example, that California software company Cadence Design Systems recently unveiled a new software, dubbed Cerebrus, meant to make microchip engineers more productive. Long:

On a recent call with Wall Street analysts, Cadence executives said Cerebrus makes chip engineers 10 times more productive, the kind of gain that could ultimately lower chip costs, not to mention getting faster turnaround for new products. “I believe Cerebrus is a fundamental breakthrough,” said Anirudh Devgan, president of Cadence Design Systems, on a recent earnings call.

Cerebrus is a good example of AI complementing workers and making them more productive rather than merely replacing workers. I would also point out that the phenomenon being described here by Long is a big reason why economist and productivity optimist Erik Brynjolfsson thinks productivity growth over the next decade will exceed consensus forecasts. As he recently explained in Long Bet with economist and productivity pessimist Robert Gordon:

AI is a general-purpose technology that is affecting almost every industry while accelerating the pace of discovery. Recent breakthroughs in machine learning will boost productivity in areas as diverse as biotech and medicine, energy technologies, retailing, finance, manufacturing and professional services. . . . The productivity benefits of general-purpose technologies typically take years to show up in the official statistics. In fact, productivity is initially suppressed as organizations invest time and effort creating intangible assets like new business processes, new skills, new goods and new services. However later, these investments are harvested, boosting productivity. The result is a productivity J-curve. Recent research indicates that are approaching the rising part of the productivity J-curve for the AI and related technologies.

Not surprisingly, perhaps, I urge policymakers to assume this is a productivity blip rather than a boom as they think about policies from immigration to environmental regulation to research investment.

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