by the Economist

About the author: The Economist is a weekly magazine of business and politics.

The announcement on May 8th [2001] that America’s productivity declined in the first quarter of 2001 at an annual rate of 0.1%, compared with growth of more than 5% during the year to June 2000, is a blow for the information technology (IT)-powered new economy. One by one, its claims to be special are being exposed as myths. Now it seems that the widely-held belief that America’s sustainable rate of productivity growth had doubled to around 3% was also mere myth. That does not mean, however, that the new economy was entirely hot air.

Its cheerleaders have certainly been muffled this year by the plunge in the Nasdaq high-tech stockmarket index, by the collapse of dotcom firms...