Macrocast report – Zoom on the Boom by Gilles Moëc

Key takeaways:

1. US productivity surge: The US has experienced a notable surge in productivity, potentially fueled by increased investment in Intellectual Property (IP) since the mid-2010s, particularly in software and R&D. This surge has led to strong gains in GDP per hour, with implications for economic growth.
2. Divergence with Euro Area: The US-Euro area growth performance divergence is attributed to fundamental factors and differences in monetary policy transmission. While the US has seen productivity gains, the Euro area has lagged, potentially due to slower adoption of digital technologies and policy differences.
3. Policy implications: Two narratives explain the US economy's resilience: fiscal support from initiatives like the Inflation Reduction Act (IRA) and persistent productivity gains. Understanding these narratives is crucial for formulating effective economic policies.
4. Intellectual property investment: The acceleration in IP investment, particularly in software and R&D, is highlighted as a key driver of productivity gains. Increased adoption of Information Technologies (IT) and digital solutions has likely contributed to this trend.
5. Policy challenges for Europe: The Euro area faces challenges in matching US productivity gains, with implications for policy decisions. Emphasizing IP investment and digitalization efforts, such as those outlined in the Next Generation package, may be crucial for boosting productivity in Europe.