There is no end in sight. That’s how John Ryding, senior economist at Bear Stearns & Cos. in New York City, sees the record period of economic expansion the nation has experienced in the past 107 months.
A key reason for the expansion in recent years is that Americans are getting more productive, thanks largely to technological improvements apparent in the growth of the Washington area’s high-tech industry.
The new mark reached on Tuesday beats the old record of 106 months set during the 1960s. Technology’s contribution to the expansion, which began in March 1991, is just heating up.
“We’re still relatively early on in this,” Mr. Ryding said. “I can see us having another five to 10 years of 4 percent economic growth.”
Using a baseball analogy other economists have adopted, Mr. Ryding believes technology innovations are in the third inning of a nine-inning game. Games can get interesting early, but fans know there is a long way to go, as he sees it.
The Washington area is fortunate to have a front-row seat from which to watch technology’s effects on the economy.
Vienna-based MicroStrategy, for example, has helped pinpoint marketing efforts through the use of databases. The company, which exclusively serves other businesses and is heavily invested in retail, helps its clients determine when market conditions are ripe, improving the chances of sales.
Mr. Ryding said technology has added to the ability to track inventory, which has had a major impact on productivity.
One example he uses is the ability of dispatchers to track the location of a cement truck, using global positioning satellites. Since cement hardens, it is important that companies get their product delivered in a timely manner. Dispatchers can assign jobs to different trucks in a more efficient way, thanks to the technology.
Such scenarios, which run across pretty much every industry, are making a major contribution to economic growth.
The world’s largest Internet service provider, America Online, is improving communication and allowing employees to transfer information between home and work. The Sterling, Va., company’s influence continues to grow as it announced last week that it hit the 21 million subscriber mark.
Of course, AOL’s recently announced plan to buy Time Warner represents a breaking down of the barriers that have separated different types of media.
Mr. Ryding said the ultimate impact of linking technologies that were once distinct and separate is far from known. Radio, television, tapes and compact disks are all equalized by the power of increasing bandwidth, that is the growing capacity allowing the transmission of large amounts of data to computers.
“You can get a computer now for under $500. The whole of NASA didn’t have that kind of power in 1969,” Mr. Ryding said.
The dropping price and increasing power of computers has also made them increasingly pervasive, particularly in the home.
It used to take time for consumers to find the lowest price for a product. Now they can use Web sites to find the best deal with a few keystrokes and clicks on a computer.
Charles McMillion, president and chief economist of MBG Information Service in the District and an expert on the local economy, agrees that the changes now under way are pervasive.
“Every business I know of does a good deal of their business on the Internet,” Mr. McMillion said.
In this area, where government contractors abound, the Internet improves the efficiency of tracking and bidding on jobs. Human resource departments are increasingly using the Internet to find resumes and communicate with off-site employees.
Mr. McMillion said the region’s technology companies have not only contributed to this period of expansion; they have benefited from it as well.
The popularity of Internet and other technology companies on the New York Stock Exchange and the Nasdaq markets has given those companies money to grow on. Venture capitalist investors are on the prowl for companies with potential.
The money is fueling innovation and growth. Although most economists don’t believe the good times will last forever, there are few serious threats on the horizon. The Federal Reserve, and Chairman Alan Greenspan, have worked to keep the threat of inflation in check by gradually raising interest rates.
“I don’t think it will last forever, but it was three years ago that Greenspan and I warned about ‘irrational exuberance.’ At that point, the Dow was [at] 6,000,” Mr. McMillion said. The Dow Jones Industrial Average closed at 10,963 Friday.
There is little doubt in Mr. McMillion’s mind, however, that the technological innovation that has been so important to this economy will continue. “I’m a big believer that we’ve only just begun to see the changes in how we do our business.”
Bernard Dagenais, business editor of The Washington Times, can be reached at 202/636-3173.