law enforcement agencies to hold those who are involved in our supervised institutions accountable for criminal activities related to mortgage lending. again, i want to thank you for the opportunity to discuss what the federal reserve does to address and prevent mortgage - related fraud and abusive lending practices in the institutions we supervise.

with rising utilization rates, bode well for further increases in business capital expenditures. indeed, capital expenditures for most types of equipment increased significantly during the third quarter, and census data on orders and shipments suggest that investment continued to expand in the fourth quarter, with much of the gain in spending for information technology - - that is, computers, communications equipment, and software. productivity and technology let me now turn from the overall economic outlook to productivity and technology developments. productivity growth receives a considerable amount of attention from policymakers because its rate is an important determinant of a nation's standard of living. the development of farm machinery in the early 1800s, for example, boosted the productivity of farmers and consequently freed up labor to shift to the industrial sector. more recently, continued increases in industrial productivity have enabled a relative shift of employment into the production of services. although manufacturing employment has fallen sharply in recent years, both in absolute terms and as a share of total employment, the output of the nation's manufacturers has continued to increase because of impressive productivity gains. looking beyond manufacturing to the broader nonfarm business sector, we see that productivity growth has risen significantly over the past decade in the united states. labor productivity gains accelerated from an average annual increase of 1 1 / 2 percent over 1973 - 95 to an average annual increase of 2 1 / 2 percent over 1995 - 2001. from the first quarter of 2001 through the third quarter of 2005, labor productivity growth picked up even more - - to an annual rate of nearly 3 1 / 2 percent. thus, despite a recession, a tech - sector meltdown, a stock market correction, terrorism, and corporate governance scandals, our economy has proven remarkably resilient and productive. these productivity gains result from many forces, including business investment that has increased the amount and quality of capital available to the workforce, business process innovations, and the growth of innovative, research - intensive industries such as information technology and biotechnology. because firms may take a while to absorb a rapid run - up in investment, the productivity payoffs to investment may be drawn out for some time as firms learn more effective ways to use the capital they have acquired. anecdotal information suggests that some of the recent productivity gains appear to reflect firms making better use of existing capital and improving business processes. as i noted, the growing importance of the innovative technology sector has spurred productivity growth. i will focus on developments in the information technology ( it ) sector ; we at the federal reserve know more