March 7, 2014
Everyone has a pet theory explaining why the economic recovery has been so weak, but here’s one overlooked factor: The productivity revolution driven by computers, software and the Internet is fading, and nothing has yet emerged to take its place as an engine of growth.
For all of the incessant buzz in the markets about the latest tech start-up, few businesses are investing much in high-tech equipment or software. Investments in information processing equipment and software are growing at the slowest pace in decades, just a fraction of the booming growth rates of the late 1990s. See the Bureau of Economc Analysis data.
High-tech investments were a major driver of the economy in the 1980s and 1990s. Businesses were spending a lot on new equipment, software and research, and those investments were paying off by boosting output.