New Economy, New Recession?

Abstract

The National Bureau of Economic Research (NBER) confirmed in November 2001 what many had long suspected - that the U.S. economy was in recession and had been since March 2001. Thus ended an economic expansion that had begun in March 1991, the longest in the NBER chronology that dates to the mid-1800s. During this expansion, many economists and policy analysts talked about a "New Economy" characterized by a higher sustained level of productivity growth brought on by new networking information-sharing technologies. What does the New Economy's new recession look like? This article examines the 2001 recession by comparing it with previous recessions and investigating whether an added degree of resilience and flexibility is evident in the economy. The downturn appears to have been relatively mild and to have been tempered by the productive use of information technologies. Paradoxically, the information technology sector itself was hit exceptionally hard.