Explaining a Productive Decade

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Abstract
Productivity growth in the United States rose sharply in the mid-1990s, after a quarter century of sluggish gains. That pickup was widely documented, and a relatively broad consensus emerged that the speedup in the second half of the 1990s was importantly driven by information technology (IT).1 After 2000, however, the economic picture changed dramatically, with a sharp pullback in IT investment, the collapse in the technology sector, the terrorist attacks of September 11, 2001, and the 2001 recession. Given the general belief that IT was a key factor in the growth resurgence in the mid-1990s, many analysts expected that labor productivity growth would slow as IT investment retreated after 2000. Instead labor productivity accelerated further over the next several years. More recently, however, the pace of labor productivity growth has slowed considerably. [End Page 81]

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