How do "widgets" fit into our services-based economy?

The U.S. has been on a bit of a winning streak with productivity. With the exception of the first quarter of this year, productivity has been on the up and up since 2023. To get that productivity figure, economists do some version of the equation: widgets produced per hour.

Widgets are the general stand-in for any good being produced. Radios, t-shirts, or cans of soup are all widgets.

By definition, a widget isn’t real, and that’s the point, but one might still like to imagine them. For Timothy Taylor, managing editor of the Journal of Economic Perspectives, they’re something amorphous.

“You can almost think of them as the stuff that goes into 3D printers,” Taylor said.

The Oxford English Dictionary tells us that when the word “widget” first came on the scene in 1924, it actually had nothing to do with economics. Instead, it came from a play called “Beggar on Horseback.”

“It's a comic play about a young man who only wants to play classical music, but he's in love with the daughter of a wealthy industrialist,” Taylor said.

He tries to go work for her father at “the biggest manufacturer in the world of overhead and underground and aerial widgets.” According to Taylor, part of the comedy is that the young man, like the audience, has no idea what that means.

After that, the word “widget” just started showing up, like in a stop-motion economic explainer from General Motors in 1939, but, outside of the classroom or educational videos, people don’t really talk about widgets.

“I don't hear the head of the Federal Reserve or the head of the Treasury saying, ‘Just think about it in terms of widgets, everybody,’” said Taylor.

There are probably a lot of reasons Fed Chair Jerome Powell isn’t talking about widgets in his pressers, but, for one, the U.S. economy has changed. 

Manufacturing only makes up around 10% of GDP now, down from more than a quarter at its peak. And that’s because America is now a services economy —  and, historically, widgets weren’t services; they were tangible things.

Ioana Marinescu, an associate professor at the University of Pennsylvania School of Social Policy and Practice, pictures them as something easily countable.

“In my mind, I see like little marbles or something,” Marinescu said. “It's like, plop, plop, plop, plop. Widget, widget, widget, widget.”

In the services sector, though, the widgets being produced are much harder to count than marbles.

“If we're talking about software for accounting, what is exactly the unit that's being produced by an accounting software? Who knows?” said Marinescu. “However, it's not completely impossible. You can look at cancer research, and so you can measure, per additional paper, now that's your widget, how many more years of life saved.”

In today’s economy, widgets might look like lines of code written, children cared for, haircuts given, or dogs walked. And as the economy keeps changing, the way we visualize widgets will too.