NEW YORK (CNNfn) - It just keeps going and growing. Strong economic growth, stable prices for goods and services, record-low unemployment and stable lending rates have made the U.S. economy look remarkably similar to the Energizer Bunny on steroids. Absolutely nothing seems able to stop it.
The Dow Jones industrial average is now within spitting distance of the dizzying 11,000 mark. The economy is chugging along at an impressive 4.5 percent pace, as reported Friday by the Commerce Department. Inflation is practically non-existent, currently below 1 percent, and unemployment rests at 4.2 percent, a 29-year low, while demand for labor remains more robust than ever and labor costs remain subdued.
So what gives? How can the economy keep going at this dizzying pace without, at some point, slowing down?
Technology, say the experts.
On the cutting edge of technology
On every level, in almost every part of the world, technology has made the human race faster, better, cheaper. Like railroads in the late 1800s, cars in the early 1900s, radio in the '20s and television in the '50s, information technology is changing the world economy in a way that analysts, investors, politicians and policymakers are just beginning to understand.
Federal Reserve Chairman Alan Greenspan and his colleagues have referred to this new age as the "new economy" -- where rapid and widespread improvements in technology have boosted productivity and allowed firms to keep prices for their goods and services low.
To accommodate this seismic shift, monetary authorities have already implemented subtle changes in policy in the past two years in an attempt to keep the longest peacetime economic expansion on record going at a sustainable, non-inflationary pace.
Indeed, the growing consensus among Fed officials is that productivity growth -- which languished around the 1-percent mark in the 1970s and 1980s and has since leapt above 2 percent -- has taken a long-term leap as companies use information technology to become more efficient.
Apple: A model of efficiency?
Take Apple Computer (AAPL). Most people attribute the company's unbelievable turn-around in the past two years to the return of co-founder Steve Jobs and the creation of the Herbie-the-love-bug-like iMac.
But there's more to it than that. On top of shedding 15 of its 19 product lines, closing plants and firing thousands of employees, the Cupertino, Calif.-based computer maker spent millions of dollars upgrading its assembly lines, slashing inventories and cutting order-to-delivery times to less than one day.
Some of Apple's products used to sit on the factory shelf for weeks -- even months -- before being shipped to distributors. Now it manages to turn over its entire inventory in less than six days, thanks in most part to new technologies and better tracking systems that account for exactly how many units are needed in each region Apple sells to.
"Keeping streamlined and up-to-date is crucial in this business," said Greg Jones, an Apple spokesman. "Without the capital investment to bring our entire production line up to speed, we'd never have gotten there."
And that's just one company. Thousands of firms around the world, particularly in North America, have been doing much of the same thing. And it's the fruits of their labor that are producing the longest peacetime economic expansion on record, some analysts say.
"It's a bit like closing your eyes and holding your breath waiting for a giant wave to crash down -- only to find that the wave has disappeared," said Andrew Pyle, chief strategist at ABN Amro's Canadian unit. "There's a very similar correlation between what's going on now and what happened during the industrial revolution."
And some market gurus are confidently forecasting that the party will never end.
"It's nothing short of a revolution," said Lloyd Atkinson, principal of Toronto-based Perigee Investments Inc. and one of the most accurate and well-respected forecasters north of the 49th parallel. "The realities of the technology revolution will be realized in both the U.S. and Canada beyond the year 2000, which is going to lead to a sharp acceleration in earnings growth across the board."
No one has numbers that properly measure productivity, making it difficult to predict exactly what kind of influence capital spending on technology has had on boosting output. And not everyone agrees that the state of nirvana the North American economy has reached will last.
"It's not an easy issue to deal with in real terms because nobody knows the numbers," said Mario Angastiniotis, a market analyst at Standard & Poor's research arm, MMS. "No one knows for sure that technology has made a difference in productivity, and you can't really measure it.
"Certainly this time around we've managed to extend the business cycle, but it's still too early to say whether that's a stretch of the business cycle or whether we've changed things for good with technology," he said.
Still others argue that the traditional economic cycle is alive and well, and that while technology has made people's lives a lot easier, it's done so at a price -- either in terms of the amount of time they spend working, or the amount of additional money they commit to goods and services.
Even today's GDP report suggested prices aren't going to remain stagnant forever. The GDP deflator -- a measure of price pressure within the economy -- rose 1.4 percent in the first three months of the year, according to Friday's report.
"Real wages have been kept at bay and low inflation has been partly a reflection of the poor state of the countries we import from," said Sheamus McCateer, director of Web strategies at Jupiter Communications, a high-tech research firm. "Sure, part of the reason prices haven't risen is because of technology and productivity improvements, but those same improvements have also forced people to work their arses off.
"I'd certainly agree that technology has altered the economic landscape for good," McCateer added. "What I wouldn't agree with is that it's shifted the economy as we know it for good."