Developments in computing and telecommunications technology are changing America's industrial landscape and its workforce. The application of new digital technologies to management, manufacturing, distribution, and services has produced significant and lasting increases in productivity. The new technologies have also created new industries (e.g., Internet access providers) and entirely new kinds of work (e.g., website designers) and boosted other industries. But the new technologies have also shrunk or even eliminated other industries and the jobs associated with them (e.g., electric typewriters).

IT is fundamentally restructuring business practices. IT innovations have increased the efficiency of business operations. New IT-based inventory systems allow businesses to cut costs by delivering or receiving parts for "just-in-time" assembly. By reducing delivery times and inventories, "just-in-time" assembly allows businesses to meet consumer demand more quickly and cheaply.

IT and the use of the Internet have also dramatically transformed exchanges between buyers and sellers. Some Web-based businesses, such as Amazon.com, are using the Internet to sell and arrange for the delivery of large quantities of goods without buyers themselves having to access a network of wholesalers and retail stores. "Business-to-business" (“B2B”) commerce over the Internet helps many companies streamline their sourcing of production inputs and allows them to sell products or services to other companies.  Similarly, companies are using the Internet to find other businesses that might want to buy their products or services or sell them products or services. The value of B2B e-commerce exceeds the value of e-commerce between Internet retailers and individual consumers.

Over the past five years there has also been a proliferation of on-line employment marketplaces, which offer new tools for buyers and sellers of labor to link up with each other. Internet-based recruitment services enable employers to post job announcements on the Internet and prospective employees to search job listings or post their resumes.

Global e-commerce is growing steadily; past growth shows a gradual upward trend (See Figure 2). ³ The U.S. online retail sales are expected to grow from $131.8 billion in 2009 to $182.6 billion in 2012.⁴  Because of the growth of e-commerce, other sectors of the job market have shrunk and will continue to do so. For example, employment for stock clerks and order fillers are expected to drop by 171,000 from 2006 to 2016.⁵ On the same note, retail sales at physical stores are expected to grow at an annual rate of 2.6% from 2007 to 2012, but online sales are expected to grow 14% annually for the same time period.⁶

Extraordinary labor productivity growth, coupled with a rapid increase in Internet usage by businesses and individual, has prompted some economists and other analysts to argue that the United States now has a "new economy." According to this view, permanently higher productivity, more versatile and flexible corporations, and a likely reduction in the periodic ups and downs of economic activity, known as the business cycle, characterize the new economy.

One significant implication of the new economy theory, if it is correct, is that the United States will be able to grow at a faster rate than has been the historical norm, without generating price inflation. Among other things, higher, non-inflationary growth would enable further reductions in our unemployment rate.

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