When hearing the word “growth”, some express a knee-jerk reaction, such as, “We shouldn’t seek more growth…growth can be a cancer, causing more pollution and cheap junk cluttering our lives,” or something similar.
For those concerned with the quality of life and our environment, we should be aware that most growth in established developed nations comes from: (1) greater worker productivity, (2) clean technological innovation, including miniaturization and improved energy efficiency, and (3) far more growth in human services (mostly non-polluting) than in manufacturing (which is potentially polluting).
Let’s take a closer look at these three clean and creative growth components, one at a time.
#1: Productivity, or output per hour worked, is the primary driver of long-term growth. In the U.S., labor productivity growth has recently averaged over 2%, with non-farm business productivity growing at a 2.1% annualized rate in the current cycle, with productivity contributing most of our economic growth.
More growth can come from more workers, but that’s the rockier road. We don’t have enough willing new workers to add 3% more workers to U.S. each year, so a cleaner, more efficient recipe for growth is to help our existing workers turn out more per hour, month, or year – and we’re doing that very well.
According to TD Economics, the U.S. economy saw a 4.9% surge in non-farm productivity in the third quarter of 2025, which eclipsed the overall GDP growth rate that quarter (at 4.4%). That’s a big leap from the previous decade’s growth rate in worker productivity – closer to 1.5 percentage points, or about half of a typical 3% annual growth rate. Much of this is due to technological advances (see next segment).
#2: Cleaner Technology: In 2024, “Total Factor Productivity” (TFP), which measures efficiency gains from technology and innovation, was up 1.23% in a year in which our GDP rose by 2.8%. The recent burst of productivity since 2024 is mostly AI-related. For context, in the pre-COVID period, 2007 to 2019, TFP contributed less (0.56 percentage points), while labor added a nearly equivalent 0.58 points.
Economist Simon Kuznets developed the Environmental Kuznets Curve (EKC), which shows how poorer nations (think China or India) add to their industrial pollution during their early development cycles – as America once did, a century or so ago – increasing pollution temporarily, but after those poor economies reached a certain income threshold, their higher wealth promotes much better environmental protection.
Among the more developed economies, pollution tends to retreat. According to UNCTAD, the European Union saw greenhouse gas emissions fall by about one-third between 1990 and 2023, while their GDP grew by roughly two-thirds. The U.S. has also seen carbon emissions fall as its economy expanded.
#3: Service Jobs Dwarf Manufacturing Jobs: Since 1950, the percentage of U.S. jobs in manufacturing has retreated, while the role of the service economy has expanded. (A third category would be government jobs, not charted below). These service jobs aren’t dominated by much-maligned starter jobs, like “hamburger flipping,” but are led by highly skilled medical and technological workers on the top end.
In their book “Superabundance,” Gale Pooley and Marian L. Tupy demonstrate this trend toward more skilled service-sector jobs leading toward greater resource abundance, not scarcity, because more people generate more ideas and innovation, which increases efficiency and lowers the “time price” (time on the job needed to acquire goods and services). Although prices for goods have risen, the amount of time we spend working in order to afford those goods has risen faster, as human ingenuity, spurred by freedom and more population, creates more value than it consumes, making resources more affordable over time.
There Will Be Growth in the Spring
Growth comes in cycles, like the seasons. The first quarter is usually a challenging season for growth, with major weather disruptions and shorter daylight hours. The second quarter – Spring – generally brings relief from winter’s assault, raising our spirits in the process. This was dramatized in a humorous way by actor Peter Sellers (in “Being There,” 1979) playing a gardener who seems like an economic genius:
Here’s a link to Chauncey Gardner’s tutorial with the President: There Will Be Growth in the Spring.
True so far: April delivered a cracker-jack stock market, and GDP growth could reach 5% in late 2026.