We examine the recent slow growth in manufacturing productivity. We show that nearly all measured TFP growth since 1987—and its post-2000s decline—comes from a few computer-related industries. We argue conventional measures understate manufacturing productivity growth by failing to fully capture quality improvements. We compare consumer to producer and import price indices. In rapidly changing industries, consumer price indices indicate less inflation, suggesting mismeasurement in standard industry deflators. Using an input-output framework, we estimate that TFP growth is understated by 1.7 percentage points in durable manufacturing and 0.4 percentage points in nondurable manufacturing, with no mismeasurement in nonmanufacturing industries.

More on this topic

BFI Working Paper·Oct 21, 2025

Who Pays for Tariffs Along the Supply Chain? Evidence from European Wine Tariffs

Aaron B. Flaaen, Ali Hortaçsu, Felix Tintelnot, Nicolás Urdaneta, and Daniel Xu
Topics: Fiscal Studies, Industrial Organization
BFI Working Paper·Sep 18, 2025

Missing Markets for Innovation: Evidence from New Uses of Existing Drugs

Eric Budish, Maya M. Durvasula, Benjamin N. Roin, and Heidi L. Williams
Topics: Industrial Organization
BFI Working Paper·Sep 5, 2025

Superstar Firms through the Generations

Yueran Ma, Benjamin Pugsley, Haomin Qin, and Kaspar Zimmermann
Topics: Industrial Organization