The New Economy Slides: The Goldilocks Economy. We discussed the fact that increases in productivity growth rates resulted in a very happy situation in virtually every aspect of the US economy!
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WASHINGTON – “In September 1996, Alan Greenspan was fixated on a statistic neglected by most economic forecasters. It was service-sector worker productivity, a measure of how much an employee could produce in an hour.Government data suggested it was falling. The chairman of the Federal Reserve was convinced they were wrong. Casting his eye across the American economic landscape, he focused on other signals: rising orders for high-tech equipment and higher profits at the companies that bought the gear.
So more people are working and they are making a higher real wage since they are more productive – so what is happening to the size of the economic pie?
So this was the goldilocks economy – people were working, making higher real wages, making gains in wealth in the stock market, had job security and were very confident in things (the future was so bright you had to wear shades!)