Since most people receive the lion's share of their incomes from wages and salaries, the growth of real wages is the principal determinant of how fast standards of living will rise. Productivity is no abstract number. In the long run, it is the name of the game. For example, with annual productivity growth of 2.5 percent and labor force growth of 1 percent, the economy's trend growth rate would be 3.5 percent per annum. The central job of monetary and fiscal policy is to manage the demand for goods and services so as to keep it in line with the economy's capacity to supply.
Productivity growth is the crucial ingredient.
Equip its workers with more and better capital. Improve the technology, so that given inputs produce more output. This, of course, is where information technology comes in, and it is where I will focus. Studies dating back to the 1950s have consistently shown that technology is the primary driver of productivity gains. Since there is no widely accepted theory for why growth suddenly slowed, it should not be surprising to find it speeding up again.