2022 Total Factor Productivity — 2023-03-23

Total factor productivity (TFP) in the private nonfarm business sector decreased 1.2 percent in 2022, the U.S. Bureau of Labor Statistics reported today. (See table A.) The 2022 decline in TFP reflects a 2.3-percent increase in output and a 3.6-percent increase in the combined inputs of capital and labor. Capital input grew by 2.9 percent and labor input�which is the combined effect of hours worked and labor composition�increased by 4.0 percent. This is the first time since 1993 that both capital and labor growth have outpaced output growth, leading to the decline in total factor productivity. Besides the COVID-19 pandemic year of 2020, this is the largest decline in productivity since 1982. Total factor productivity is calculated by dividing an index of real output by an index of combined units of labor input and capital input.