FEDS Note: Investment as a Source of Productivity Growth
federalreserve.gov·1d
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October 15, 2025

Investment as a Source of Productivity Growth

Giuseppe Fiori, Colleen Lipa, William Wu1

1. Summary

Over the past two decades, the divergence in GDP per capita between the United States and major European economies has grown. Relative to 2000, this gap has widened to reach about 40 percent (see Panel A in Figure 1). This difference can be partially attributed to superior productivity performance in the U.S. economy compared to its European counterparts (see Figure 1 Panel B).2 This GDP per capita differential coincides with periods when the U.S. had higher growth in real equipment investment and invested in more efficient technologies (see Panels …

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