The Productivity Debate (Continued)
We may be entering the second great technology boom. The first one, of the late '90s, was a boom in expectations, which pushed up stock valuations and investor enthusiasm in the belief that the new technologies born of the internet would fundamentally transform the economy.
It's starting to look like investors were right, just off slightly in timing and targets. I'm no economist, but I am a true believer in the transformative power of technology, and a close observer of just how many places such transformation is happening.
Is this boomlet we are now officially in the "Bush Bubble" built on artificially low interest rates, tax rebate checks, and inventory rebuilding, or is it a real recovery built on huge gains in productivity driven by technology investments made over the past ten years?
It's too early to tell. But it's hard to imagine that Corporate America isn't much more efficient than it was 10 years ago and my guess is that a good part of the recovery in profits is coming from that. We'll see how sustainable it is.