Americans returning from visits to western Europe or Japan cannot help but notice they are coming back to a land with less worker protection, more expensive healthcare, spottier transport and a weaker educational system. The consolation has long been America’s higher material wealth, commonly believed to stem from generations of increases in productivity.

Not exactly. Since the second world war, a big rise in labour force participation (the proportion of the population in paid employment) has done as much for prosperity as higher productivity. Participation is declining. A study from McKinsey Global Institute concludes that, if America maintains the same level of productivity growth as in the past half century, growth in output per capita for children born 10 years ago will be slower than in any generation in the past half century. Over the next decade, real output would only grow at an average annual rate of 2.2 per cent, versus 4.1 per cent in the baby boomer-fuelled 1960s.

The government, and bond investors, should be concerned. The slower growth rate, two-thirds of what White House economists assume in their budget projections, will make it harder to handle rising interest and entitlement payments. Luckily, there is plenty of room for improvement in productivity. The US ranks low in measures such as energy efficiency and relative quality of infrastructure, and much labour is used inefficiently.