NO ONE HAS IT HARDER THAN THEIR FATHER DID:

[G]oldman thinks that while the official numbers show an IT-led productivity slowdown, other metrics do not: "Profit margins have risen to record levels, inflation has mostly surprised on the downside, overall equity prices have surged, and technology stocks have performed even better than the broader market." It was just the opposite when the productivity slowdown began in the 1970s.

Maybe metrics devised for a wheat-and-steel economy of physical commodities are poorly suited for one experiencing rapid growth in software and digital content. Maybe there is a systemic understatement of productivity and GDP growth:

But is the weakness for real? We have our doubts. ... Specifically, we see reasons to believe that the well-known upward biases in the inflation statistics related to quality changes and the introduction of new products are particularly severe for software and digital content. Quantifying the effects is difficult, but it is not unreasonable to think that they could offset a substantial portion of the measured productivity slowdown. ... How much better are the inventory management systems that retail companies contract out or develop for their own account compared with those of twenty years ago? How much better is Grand Theft Auto V than Grand Theft Auto IV? And how much more value do we now derive from our internet connection compared with a decade ago? It is very difficult for a statistician to know, and when we do not know our default assumption tends to be that there is little change.

Mismeasurement of inflation has probably for years understated real GDP and income growth. But the IT revolution has likely made that understatement a worse and growing problem. (Goldman's conclusion is also very much sync with the innovation and productivity research of AEI's Stephen Oliner.)

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