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event, once these adjustments are completed, the full benefits of more rapid technological advance should show through to the growth of productivity. the central role that is being played by technological advance poses special challenges to forecasters. few technologies that influence our economic future are truly anticipated much in advance. and even when they are anticipated, their effect on economic growth is difficult to predict, in part because their pace of diffusion and application is so uncertain. the latter consideration is particularly significant to the longer - term rate of growth of productivity. the events of the past decade clearly illustrate those difficulties. few observers foresaw how microprocessors, integrated circuits, and the mating of laser technology with fiber optics, even well into their development and application, would rejuvenate the american economy. for example, as recently as a decade ago, the outlook was for a continuation of meager gains in output per hour, with the rate of growth barely exceeding one percent per year, if that. instead, during the last half of the 1990s, we experienced a surge in productivity growth well above the rate of increase experienced in the previous quarter - century. even as our economy slipped into recession, the growth of output per hour remained positive and, as i indicated earlier, has held up well even in the wake of september 11. until last year, the hypothesis of an accelerated productivity trend had not been tested in the contracting phase of a business cycle. recent developments have provided that test, and the early returns certainly look favorable to the hypothesis. in retrospect, our economic structure changed in the mid - 1990s. the crucial agent of this remarkable change was the quantum leap in information availability. if the tentative indications that the contraction phase of this business cycle is drawing to a close are ultimately confirmed, we will have experienced a relatively mild downturn. to be sure, a great deal of real economic pain has been felt over the past year and a half. but imbalances have not been allowed to fester. they could have progressively undermined endeavors at stability and prolonged this difficult period. the american economy has had to absorb some extraordinary shocks over the past year and a half. for the economy to have weathered as well as it has a severe deflation of equity asset values followed by an unprecedented blow from terrorists to the foundations of our market systems is impressive. in my judgment, this performance is a testament to the exceptional degree of resilience and flexibility that our economy has gained in recent years, much of which owes