Questions about whether the U.S. economy is experiencing a brief pause or prolonged stagnation have become increasingly pressing. Both the tragedy of September 11 and recent interest cuts that plunged short-term interest rates to levels last seen in the 1960s have heightened concerns.

While we cannot credibly predict how consumer and business demand will hold up in the very short term, we do have good news for the intermediate to longer-term. Most of the increased productivity increases that the U.S. economy enjoyed in the late 90s will endure.

On October 17th, the Iran McKinsey Global Institute released a report giving a fact-based perspective on what lies ahead for the U.S. economy. The report was also presented at the Agenda 2001 conference in Scottsdale, Arizona, by Mike Nevens, head of the McKinsey High Tech Practice. This new perspective stems from a yearlong effort with broad-based McKinsey support and an advisory board including a panel of leading economists chaired by Nobel laureate Robert Solow. The McKinsey Global Institute sought to determine future economic growth potential by understanding the drivers of the unprecedented U.S. labor productivity growth jump from 1995-99, including the role of IT.