Three summers ago, BUSINESS WEEK introduced its readers to the idea that the U.S. economy was undergoing a metamorphosis. The economy would no longer be plagued by anemic growth, low productivity, and recurrent inflation, went the theory. Rather, the forces of technological advance and global competition were creating an economy in which fast growth and low inflation could live side by side. Best of all, most Americans' standard of living would rise.
The New Economy, as we called it, came under sharp fire, mostly from some traditional economists. But Federal Reserve Chairman Alan Greenspan seemed to share our view, and he wisely has held the line on interest rates, even though growth has continued strong and labor markets have tightened.
The data, though incomplete, are starting to support the concept of the New Economy. Over the past three years, growth has been well above the trend of the previous two decades, while inflation, instead of accelerating as traditionalists warned, has been falling. Perhaps most important, wages, which had been lagging, were suddenly catching up. We were especially heartened when the July revisions to the data showed that economic growth over the past three years was on average 3.3% a year--0.4 percentage points higher than originally reported.
It should come as no surprise, therefore, that we have chosen to devote our summer double issue to a broad-based analysis of what The 21st Century Economy will look like. Will growth remain robust? Will the standard of living rise? What breakthroughs in technology are we likely to see--not only in information technology but also in biotech and finance? How will new technology transform our manufacturing sector? What tools will the executive need in order to effectively manage? Where are the new technology hot spots around the globe? And much, much more.
Economics Editor Michael J. Mandel, who spearheaded our New Economy coverage, directed the project. Mike won the coveted Gerald Loeb Award this year for his cover stories "The New Business Cycle" and "How Long Can This Last?" Mike, who holds a PhD from Harvard University, joined BUSINESS WEEK in 1989 from the Stern School of Business at New York University, where he was assistant professor of economics. Working closely with Mike were Chief Economist William Wolman and Associate Editor Keith Hammonds, who helped coordinate the efforts of more than 30 reporters and editors to produce this 60-page report.
Senior Art Director Francesca Messina created the glorious design for the Special Issue. Associate Picture Editor Andrew Popper was responsible for the striking photography.
This is not your usual summer fare. But if you want to find out what The 21st Century Economy has in store for you, it's must reading.