Abstract

The U.S. economy is showing a number of important changes in certain of its basic characteristics. These changes concern the potential growth rate of the economy, the direction in which it is moving and the process by which growth is being attained. The article describes these developments and discusses their significance to business managers. Particular attention is given to how management policies and practices may be influenced by changing economy. Two factors, which have recently added to the potential growth rate of the U. S. economy, are the relatively rapid increase in labor force and improvement in the rate of productivity gains. Labor force is expected to expand faster in the 1960s, by over 12 million versus 7 million in the past decade. The sharp rise in birth rates in 1940s is the underlying cause of this upsurge. The more rapidly the labor force rises, of course, the more rapidly can output be expanded. Productivity since 1959 has been rising by about 3 per cent per year, compared to 2 per cent over both the long-term and the 1954 and 1959.