The Next Downturn

Will a New Economy bust follow the New Economy boom?

Five years ago, BUSINESS WEEK led the way in writing about what was later called the New Economy. The idea was that America was undergoing an economic transformation. Technological innovation, combined with the globalization of business and a financial system that provided venture capital, were energizing the economy by boosting productivity. In this New Economy, we argued, fast growth would no longer lead to inflation, as it did so often in the old. The reason: Productivity growth from investment in technology would cut costs. And the opening of new markets around the world and fierce competition would further put a lid on prices and wages. The business cycle wasn't dead, we said, but it had dramatically changed.

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