Editor's Space: April 1999

Business Economics

One of the perplexing issues in economics is the contrast between the recent sustained, noninflationary growth in the United States and the high level of business investment (especially for computers) vs. the apparent sluggish growth of productivity. What do the statistics show, and how should they be interpreted? To answer these questions, the central theme of this issue is Productivity—Past and Future. We are especially grateful for the major contribution of Maurine Haver, the Editor of The Statistics Corner, in helping to frame the issues and obtain the services of a group of excellent and knowledgeable authors.

The first article, by Robert Arnold and Robert Dennis, provides an overview and perspective of U.S. productivity, including some measures of productivity growth since 1820 and a shot at productivity growth since the dawn of mankind. The bottom line is that the recent acceleration in labor productivity in the past few years hardly takes it above its trend since 1973 and it is well below the extraordinary rates of the 1950s and 1960s. In the next article, Jack Triplett reports that nonfarm multifactor productivity grew at 1.9 percent a year from 1949-73 but fell to 0.3 percent after 1973. He believes that the productivity slowing is real, although mismeasurement is evident, especially in the high technology and services areas of the economy. Daniel Sichel raises the issue of whether the recent improvement in productivity is caused by the contribution of computers and whether such a contribution is permanent or transitory. Then Susan Lakatos and Jason Benderly look at corporate profits, concluding that the recent profits surge is not caused by an increase in productivity but by lower interest charges and reduced health benefit costs that have caused only transitory improvements to profits growth. The final article in the series, by Roy Webb, discusses productivity statistics, pitfalls and measurement issues, and additional sources of information for those who wish to pursue the subject further.

In the Applied Economics section, the first article by Robert Murphy offers another explanation for why the decline in the unemployment rate has fallen beyond most expectations: improved efficiencies in regional labor markets. Loren Williams discusses a new concept, revenue management, the combines statistical forecasting models with quantitative optimization techniques. Then Dan Hodes, Kiran Duwadi and Andrew Wise write about the growing role of cable in telecommunications and suggest needed changes for the industry to realize its potential.

In the Business Economics in the Workplace section, Diann Painter describes the work of a business economist at Mobil Corporation. The Industry Corner, by Ed Hester, discusses the market for primary and secondary batteries, and Carolyn Scott in The Consultants’ Corner describes how to write effective contract proposals. In The Statistics Producers’ Corner, Bob Parker and Brian Grove provide information on advance reports of the 1997 economic census, John Qualls in The PC Corner tells you how to check your PC for Y2K problems, Bruce Kratofil in the Window on the Web reports on economic and financial information available on the Web, and Gerry Musgrave, our Book Review Editor, provides three excellent book reviews. Incidentally, Gerry passed along the information that Curb Rights, a book reviewed by Jack Brown in the April 1997 issue of Business Economics, won the 1998 Sir Anthony Fisher International Award as an outstanding publication in the area of public policy.

The July issue will have as a central theme South America—an area I suspect is not as well known by business economists as it should be and one likely to be in the news a lot in the months ahead. As always, we welcome your comments and suggestions for future articles and themes.

E.A.M

National Association for Business Economics
1233 20th Street NW #505 • Washington DC 20036
Phone: 202-463-6223 • Fax: 202-463-6239