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Tyler Cowen

Investors Are Celebrating the Tech Revolution

The economic transformation makes an era of steady growth and low inflation possible.
How did you mark the end of the productivity drought?

How did you mark the end of the productivity drought?

Photographer: Scott Olson/Getty Images

Why have U.S. stocks risen so high over the past year? That debate has focused on the costs of Trumpian instability versus the benefits of corporate tax cuts, but there’s another important angle: Investors now seem to think that steady growth and low inflation are compatible going forward. That’s largely because the tech revolution has taken positive turns toward a future of diverse and highly useful platforms, rather than monopoly and high prices.

Gross domestic product growth for the last two quarters was over 3 percent, even in light of hurricane damage in August and September, and middle-class income growth has resumed. You might think that would mean high price inflation from credit growth and “overheating,” but the 12-month change in core prices for personal consumption expenditures has fallen to 1.3 percent.