Fierce global competition in just about all tradable goods and services putting downward pressure on everybody's ability to set prices. The strong U.S. dollar, itself partly a response to productive opportunities for investment in the U.S. and perceived risk in other parts of the world, has made imports cheap for U.S. consumers. Some of these factors are likely to reverse as the world economy recovers. Productivity growth has accelerated in the last three years. It is by no means clear why this is happening or how long it will last.
Technology clearly has something to do with it.
Although the telecommunications and information management revolution started well before the 1990s, it may have been just at the right point by then to offer firms that are facing a combination of strong demand, tight labor markets and vigorous competition a way to increase their efficiency. One factor is the availability of new technology, especially computers and telecommunications technology. The other factor is the revolution in management attitudes and practices that has occurred since the 1980s. A whole generation of managers has been trained to think continuously about productivity and quality management. Buzzwords like reengineering and restructuring have not only gotten into the vocabulary of managers, but they have also infiltrated their thought processes and affected their behavior.