Total factor productivity in the private nonfarm business sector decreased 1.2% in 2022. The 2022 decline in total factor productivity reflects a 2.3% increase in output and a 3.6% increase in the combined inputs of capital and labor. The 2.3% growth of output in 2022 represents a stabilization of private nonfarm business output after the COVID-19 pandemic, as this growth is in line with the previous business cycle (2007–2019) growth of 2.0%.
Within the combined inputs of capital and labor, capital input grew by 2.9% and labor input (which is the combined effect of hours worked and labor composition) increased by 4.0%. 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. Combined inputs continued its recovery from the 2020 recession with 3.8% growth in 2021 and 3.6% growth in 2022. However, due to the large decline in this measure in 2020, combined inputs growth during the current business cycle (2019–2022) is now in line with growth over the 2007–2019 period.
These data are from the Productivity program and are subject to revision. See “Total Factor Productivity — 2022” to learn more. Also see more charts on productivity and costs. Total factor productivity is calculated by dividing an index of real output by an index of combined units of labor input and capital input. Total factor productivity annual measures differ from BLS quarterly labor productivity (output per hour worked) measures because total factor productivity includes the influences of capital input and shifts in the composition of workers. Measures for the most recent year of this release are preliminary estimates.
