Since 1995, real gross domestic product has grown, on average, more than 4-1/2 percent per year. This pace is significantly above that in the previous five years, and you have to go back to the 1960s to find even closely comparable periods of consistently robust economic expansion.
In this environment, the unemployment rate has fallen to 4 percent, and the underlying rate of price inflation has slowed, on net, despite very high rates of resource utilization. Even the most optimistic of forecasters could not have anticipated such a favorable confluence of economic events. Productivity Growth and Cost Reductions So, what happened?