Tags: Nutting | technology | revolution | economy

MarketWatch: The Technology Revolution May Be Over — At Least for Now

By    |   Tuesday, 11 March 2014 10:01 AM

One reason the U.S. economic recovery is so weak may be that the advances delivered by computers, software and the Internet have stalled. The much-vaunted technology revolution has gone limp, according to MarketWatch columnist Rex Nutting.

While news about the latest hot tech developments, like Facebook's $19 billion purchase of WhatsApp, still command much attention, the fact is that U.S. Department of Commerce data show private investments in information processing and software are growing at a faint pace compared with the go-go 1990s.

Nutting noted that "60 years of electronics-led productivity could be grinding to a halt. The slowdown in high-tech investment today means a slower growing economy tomorrow."

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As a result, he wrote that the next big technological break-through could come from somewhere else other than the United States.

JPMorgan Chase economists Michael Feroli and Robert Mellman concluded in a research paper that slowing advancements means the "future isn't what it used to be."

Because of waning productivity and labor force growth, the economy's potential growth rate has been trimmed by about half from its heyday of 3.5 percent annually in the late 1990s. Feroli and Mellman estimated that trend productivity is growing about 1.25 percent per year, about half that of the 1995-2004 productivity boom.

"We shouldn't get too discouraged, however," Nutting concluded. "Technology is advancing in many fields besides computing and communications. Improvements in biotech, energy or robotics could sweep through the economy, just as the electronics revolution did, boosting productivity and our living standards yet again."

In a working paper published by the National Bureau of Economic Research, economist Robert Gordon of Northwestern University said he is skeptical of "techno-optimists who currently believe that we are at a point of inflection leading to faster technological change."

Gordon said four headwinds to economic growth for America consist of demographic shifts in which younger workers are exiting the labor force, shrinking educational attainment compared with that in other nations, increasing inequality of wealth, and a long-term jump in the ratio of debt to GDP that is occurring at "all levels of government."

Slate columnist Matthew Yglesias disagreed with the pessimism about the economic growth potential for technology, noting that "more computing power will be added during the next two-to-three-year doubling cycle than has been added in the entire history of computing. And then that's going to happen again.

"Unless you think about it in the correct exponential terms, you're going to massively underrate the likely gains in the future."

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Economy
One reason the U.S. economic recovery is so weak may be that the advances delivered by computers, software and the Internet have stalled. The much-vaunted technology revolution has gone limp, according to MarketWatch columnist Rex Nutting.
Nutting,technology,revolution,economy
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2014-01-11
Tuesday, 11 March 2014 10:01 AM
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