Exploring the effects of digitization and new data on labor and total factor productivity growth in the US economy

A "new economy" has been developing for almost a decade, with various indicators suggesting a shift in the American economy. The significant growth of labor and total factor productivity in the latter part of the 1990s was remarkable, leading many to interpret it as an essential development. Some indicators are less cyclical and seem to be more enduring. We argue that the advancements in digital information and the Internet represent a new form of technology that, when integrated, forms a highly innovative system known as the new economy. Actors and concepts are increasingly intertwined. We can only start to measure the complete impact of its influence at this early phase. The new or digital economy emphasizes dynamic efficiency over static efficiency. New and innovative activities and products are more important than producing more. The Internet's growing popularity has significantly increased diverse ideas and participants and enhanced connectivity. This has initiated a genuine economic revolution. While there are noticeable impacts on efficiency and output, the more significant long-term effects are incalculable.