Is There a New Economy?

Abstract

In the mid-1990s, after decades of enviously watching Japan’s success, while languishing under a sub-par performance, the U.S. economy began to enjoy a sudden burst of productivity, while the Japanese economy sputtered. On a purely financial basis, this robust development had actually already begun in the early 1980s. For example, the Dow Jones Industrial Average stood at 884 in 1982, about the same as it was back in 1971. By 1999, it was just shy of 10,500. The rise of the technology-heavy NASDAQ index was even more dramatic. In 1971, the index was at 107. By 1982, it had grown to 189. By March 2000, it had exploded, going beyond 4,800.