June 05, 2002
Profits and Productivity

In the 1990s profits, as measured by the national income accountants, peaked in 1997. Thereafter--even as productivity and production in the entire economy grew more rapidly than they had in a quarter-century--profits fell. The benefits of the wave of innovation in information technology and economic growth in the last years of the twentieth century flowed not to corporations' shareholders but to consumers in the form of lower prices and to workers in the form of high wages and salaries. There had been a debate about whether the coming of information technology would subject American businesses to more competition, as better information technology made it easier to comparison shop, or subject to less competition, as first movers exploited economies of scale and scope to acquire entrenched monopoly positions. The answer, of course, is "both"--America is a big place where lots of things can happen. But it seems clear that the first happened more than the second: that the late 1990s saw a profit squeeze as the benefits of economic growth went overwhelmingly to workers and consumers. The joker was that America's businesses did not tell their investors that profits had peaked in 1997. By 2000 the S&P 500 firms were...

Posted by DeLong at 11:44 AM

April 26, 2002
First Quarter 2002 GDP Release

In the fourth quarter of 2001 U.S. businesses shrunk their inventories by $30 billion. In the first quarter of 2001 U.S. businesses shrunk their inventories by $9 billion. This reduction in the rate at which inventories declined all by itself induced a +3.1 percentage point swing in the rate of real GDP growth between the fourth quarter of 2001 and the first quarter of 2002....

Posted by DeLong at 03:31 PM

April 12, 2002
Productivity Discrepancies

The rate of measured economic productivity growth in the United States accelerated from 1.5 percent per year over 1990 to 1995 to 2.5 percent per year over 1995 to 2000. Or did it?...

Posted by DeLong at 03:53 PM