Does anyone disagree? I expect that as the economy heats up (which it started doing about 3 weeks ago and is getting hotter each passing day lately) we will see increased productivity again.
[link|http://www.businessweek.com/technology/content/aug2001/tc2001089_466.htm|
Why Productivity Gains May Have Legs]
Despite the downturn, chances are good that U.S. companies still have a ways to go in employing new, output-enhancing technology

[By Margaret Popper]

One of the biggest fears about the current economic downturn is that it'll kill all those wonderful productivity gains corporations have enjoyed since 1995. After all, rising productivity helped boost corporate profits year after year -- and that kept inflation from gathering steam during a time of red-hot GDP growth, despite the tightest labor market in decades.
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The hard thing for economists is to separate such cyclical movements from the underlying productivity trend -- efficiencies that stay in the system for a decade or longer. Despite the dot-com bust, many economists think the U.S. economy is currently only partly into that decade. "The encouraging thing is that we saw productivity pick up when we were well into an expansion," says the Dallas Fed's Koenig. "It's unusual to have productivity suddenly pick up when you are five years into an expansion."

Indeed, about half of the productivity increases that showed up during the latter half of the 1990s were of this more permanent kind, according to the economic studies of Northwestern University's productivity guru, Robert Gordon. It's true that a big part of those gains reflected the extent to which the tech sector employed its own technology to operate more efficiently -- and that tech is currently being hit hardest by the slowdown. Once technology demand picks up, however, those productivity gains should reappear.

And then the entire economy should benefit. It's reasonably clear that information technology has been the key to the economy's heightened productivity in recent years. "Between 1995 and 1999, IT producers and users showed the largest gains in average annual productivity growth," says Christophe Bianchet, a vice-president and U.S. economist at Credit Suisse Asset Management. Technology producers saw 3.7% average annual gains in their productivity during this period, compared with 2% gains for information technology-intensive industries and 0.43% for industries that don't use much IT.