NEW YORK (CNN/Money) - Federal Reserve Chairman Alan Greenspan said Wednesday that the strong U.S. productivity growth of the 1990s could continue for years to come, though not necessarily at this year's astonishing pace.

Greenspan, who has been one of the leading proponents of the view that the country has entered a new era of stronger productivity growth, told a conference that the productivity boom of the late 1990s has not faltered.

Instead, it actually has grown stronger over the past year, he said, even in the face of significant economic problems, including a recession and sluggish recovery.

Greenspan said the increase in productivity, the amount of output per hour of work, for this year "will almost surely be reported as one of the largest advances, if not the largest, posted over the past 30 years."

Greenspan said economists at the Fed and other government agencies as well as private forecasters were "struggling to account for so large a surge," adding that it was hard to sort out how much of recent gains came from "cutting of fat [and] reorganizing operations." He also warned there are limits to how much can be achieved through cost-cutting.

Through the 12 months ending in June, productivity for non-farm workers has risen by a sizable 4.8 percent, the biggest jump for a 12-month period since 1983. The gain is well above the improved rates of around 2.5 percent turned in since 1995 and far above the anemic productivity rates of around 1.5 percent with which the country was saddled in the two decades before 1995.

Economists closely watch changes in productivity growth because it is the key factor in determining how fast living standards can rise. If workers are able to produce more per hour of work, then their employers can afford to pay them more without having to increase product prices, something that causes inflation to rise.

Greenspan said the increasing use of computers and other high-tech equipment is supporting the gain in productivity, much like the introduction of electricity and automobiles triggered a big rise in productivity in the early part of the last century.

He also took issue with forecasters who contend, in Greenspan's words, that the current "productivity feast" will be followed by a "productivity famine."

The Fed chairman cited studies presented at the conference, sponsored jointly by the Labor Department and the American Enterprise Institute, that forecast a significant portion of the productivity rebound in evidence since 1995 is sustainable.

He said policy makers trying to make forecasts will need to exercise care as they watch events unfold during this period of "significant innovation."

Most importantly, Greenspan and other central-bank policy makers will need to pay close attention to what Greenspan called "productivity-enhancing capital investment." After a spending boom on new technology in the late 1990s, companies ended up with a glut of production capacity and not enough demand to use it all.

Greenspan predicted that, once the cost of capital eases and companies' cash flow expands, business spending will recover. He and other economists have called that recovery critical to the broader economy's recovery, since businesses will be reluctant to hire new workers until they see enough potential demand to warrant increased production.

Businesses cut about 1.8 million jobs during a recession that began in March 2001. To ease the pain of consumers, whose spending makes up two-thirds of the economy, the Fed cut its target for short-term interest rates 11 times in 2001, making borrowing cheaper.

The Fed has left rates alone so far this year, waiting to see if the recovery would take hold or if the economy would relapse into recession. Fed policy makers are scheduled to meet again on Nov. 6, and most economists expect them to continue to leave rates alone.  

-- from staff and wire reports