Economists continue to debate whether or not the nation is in—or about to enter—a recession. Some Federal Reserve officials believe the economy has already turned the corner and will show growth of as much as 3.0 percent this year. Other analysts are more bearish and give varying odds on how long and how deep a recession may be.

For most of us, the debate over the state of the national economy is of academic interest. Individuals are much more likely to judge the state of the economy by the state of their own personal and business economic health. For several years, plentiful jobs, low inflation, and widespread optimism combined to make most people confident about their own prospects and those of the economy at large.

One of the underlying beliefs that has kept most of us confident is that the technological revolution has helped productivity grow at a pace that has allowed prosperity, near full employment, and low inflation all at once. Indeed, measures of labor productivity produced each quarter by the Bureau of Labor Statistics (BLS) indicate that labor productivity improved at a 4.3-percent rate last year for all non-farm businesses and that the rate in manufacturing was an even better 7.1 percent.

But if technology is driving productivity improvement, the cost of that technology has to be accounted for to get a truer measure of real productivity improvement. The BLS does that with something called multifactor productivity trends, which account for capital investment and other factors as well as labor output. There, the trends are not quite so sanguine. By that measure, BLS says, private non-farm business productivity improved by a mere 0.8 percent—and manufacturing by 0.7 percent—in 1999 (the last year for which numbers are available). Robert J. Gordon, a Northwestern University economist who focuses on productivity, has argued that there has been essentially no productivity growth outside of the durable manufacturing sector.

I'll leave that debate to professional economists. But the issue of productivity is a crucial one for logistics and supply chain managers. Much of the effort and investment in both technology and intellectual capital over the past two decades has been aimed at process improvements to shrink cycle times, increase inventory turns and reduce inventory levels, and improve logistics reliability. The gains are undeniable, but should the economy continue to weaken, the abilities of logistics managers to maintain productivity levels when product demand slows but the need for fast, nimble, and reliable service stays high will be severely tested.