On Feb 7, 2007, at 2:31 PM, bitch at pulpculture.org wrote:
> And Doug, really, is this all because of Web 2.0? Is it also the
> exuberance
> associated with all those huge Wall St. bonuses, spurring
> investment and
> business expansion?
It's hard to see an investment boom in the national income accounts; as a share of GDP, equipment and software investment is at early-1990s levels, before the mid-decade investment and productivity takeoff. (The standard explanation of the productivity acceleration boils down to the high-tech investment mania of the second half of the 1990s. Efforts to measure the impact of the investment boom are fraught with conceptual and practical difficulties of the sort I wrote about at tedious length in After the New Economy, but bracket that for now.) Nor has there been any explosion in hiring visible in the stats either (e.g., check out the BLS's Business Employment Dynamics <http://www.bls.gov/news.release/cewbd.t02.htm>, which shows hiring at a very tepid pace in 2005 and early 2006).
A simpler explanation is that the economy has been expanding for more than five years, and since the unemployment rate never really got too high in the recession, we started with a not-very-loose labor market and it's only gotten tighter.
Doug