Will productivity beat the 1.5% growth forecast in the 5/7 report? We've been told AI will boost it!

The Bureau of Labor Statistics released its preliminary first-quarter 2026 Productivity and Costs report on May 7, showing nonfarm business sector labor productivity increased just 0.8% at a seasonally adjusted annual rate—well below the 1.5% growth forecast. Output grew 1.5% while hours worked rose 0.7%, yielding the sub-forecast productivity figure. Unit labor costs increased 2.3%, reflecting a 3.1% rise in hourly compensation outpacing the modest productivity gain. The report also found the labor share of output fell to 54.1%, the lowest value recorded since the series began in 1947. On a year-over-year basis, productivity was up 2.9%, but the quarterly rate represented a sharp deceleration. The miss came despite widespread expectations that AI-related investments would begin flowing through to measurable output gains; economists noted that technology productivity benefits often lag investment cycles by years. The 69% of the Predict Six community expecting a beat were wrong.