This pace was significantly above that in the previous five years, and you would have to go back to the 1960s to find even closely comparable periods of consistently robust economic expansion. In this environment, the unemployment rate fell to 4 percent, and the underlying rate of price inflation slowed, on net, despite very high rates of resource utilization.
Even the most optimistic forecasters could not have anticipated such a favorable confluence of economic events. Productivity growth and cost reductions So how did this confluence of positive events come about? The dominant force of late appears to have been a significant increase in the structural rate of productivity growth.