Read our full analysis for a more in-depth look at these trends.
A pulse on productivity
New business formation and capital investment has helped bolster labor productivity, but will this continue?
March 2025
Key takeaways
- Higher productivity supports long-term economic growth and better standards of living. Currently, annualized productivity growth is around 2.2% in the U.S. per the Bureau of Labor Statistics. What's driving this? For one, new business formation — startups' contribution to aggregate job creation and productivity growth is disproportionately high.
- According to Bank of America internal data, we find small business productivity peaked for firms with less than < $500k in revenue in 2021, up more than 30% year-over-year (YoY). However, in February 2025, small business productivity growth was around 5% YoY across all revenue tiers.
- Despite this moderation, BofA Global Research expects enduring productivity growth due to increasing capex spending in software, structures, and equipment. Plus, AI adoption could supplement continued growth.
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