Our Chart of the Week highlights the encouraging trend of productivity growth among U.S. workers. This increase is driven by investments in automation, streamlined post-Covid business practices, and the rise of remote work. While it may be too early to attribute these gains entirely to AI, the surge in capital expenditures and R&D spending by major technology companies suggests significant potential ahead.
Higher productivity growth is a positive development, as it boosts corporate profit margins. Markets are optimistic about this trend continuing, as sustained productivity gains and strong profit margins are critical for supporting higher equity valuations and maintaining the bull market momentum of recent years.