(FORTUNE Magazine) – The 1990s boom seems like an illusion, a flashy conjuring act with dot-coms, the Nasdaq, and the Internet that would do David Copperfield proud. But a peek behind the curtain now that the show's over might surprise you. All that stuff about a fundamental shift in productivity, it turns out, was no trick. That, ladies and gentlemen, was a genuine miracle.

Don't believe us? Then try explaining this: In the nine months after the recession began in March 2001, output per hour worked actually grew at an annual rate of 2.3%. Normally there's little or no productivity growth during a slump because domestic output falls--unless something truly remarkable is going on. "The economy has passed the test," says Mark Zandi, chief economist of Economy.com. In a telling sign that the debate on productivity is essentially over, Robert Gordon, an economist at Northwestern University who incessantly pooh-poohed the notion of a productivity revolution during the '90s, is now a believer. "There has been a structural improvement in productivity that is still with us today," he says. While that shift doesn't mean the economy will roar in the short term, it does have powerful implications for our future economic performance.

Here's what we know: Technological advances such as the networked personal computer, huge investments by companies in all sorts of newfangled contraptions, better business practices like just-in-time inventory, and who knows what else have pushed our productive performance to heights not seen since the 1960s. The turning point was 1995. In the 2 1/2 decades before that, productivity growth languished at an annual rate of 1.4%. In the seven years since 1995 it has averaged 2.2% a year. And that's after large revisions to GDP brought down economic data for the late 1990s. Now, according to a new study by the Conference Board, U.S. productivity growth is three times that of the European Union. The gains are widespread, not just in computer manufacturing, as skeptics once argued. As a result, economists, even Gordon, believe the long-term trend in productivity growth is now probably around 2.2%.

Stronger productivity is a key reason this recession has been one of the mildest on record. It's why real disposable income, which typically declines during a downturn, has kept growing. And that's been motivating consumers to keep on spending during this slump.

In the long term, the shift in productivity will almost certainly be a bonanza for the economy. It means we can grow faster without igniting inflation. And that'll keep interest rates low and spur investment. It's also important because faster growth has a way of turning federal budget deficits into surpluses, as happened in the '90s. Higher productivity also supports the dollar and encourages foreign investors to buy U.S. assets like bonds and stocks. "The economy's bottom line is productivity growth," says Zandi. "It means lots of good things could happen."

Of course, there are never any ironclad guarantees in a complex, $10 trillion economy. New forces are already emerging to slow down productivity growth. The friction economy, for instance--all the ways in which the cost of doing business has gone up since Sept. 11--reduces productivity. So does increased spending on security by the government and private businesses. All that makes it unlikely that productivity will grow as strongly as it did during the boom.

But the recent data make it clear that when it comes to productivity, the U.S. won't be returning to the dismal days of the 1970s and 1980s. The factors that produced the productivity miracle in the '90s will continue to drive the economy. So what's the moral of the story? Even in a bubble, sometimes what you see is what you get.

--Anna Bernasek