Meet the Author

Timothy Dunne |

Vice President

Timothy Dunne

Timothy Dunne is a former vice president and economist of the Federal Reserve Bank of Cleveland.

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Meet the Author

Brent Meyer |


Brent Meyer

Brent Meyer is a former economist of the Federal Reserve Bank of Cleveland.


Economic Trends

High-Technology Manufacturing

Tim Dunne and Brent Meyer

Industrial production of high-technology goods grew rapidly in 2006. High-tech manufacturing industries expanded at a 27.3 percent rate during the year, compared to manufacturing’s overall rate of 3.0 percent for the industrial sector.

The High-technology Index measures production in three information-technology manufacturing industries—computers, communications equipment, and semiconductors. Recent growth in semiconductor production easily outpaced that of computers and communication equipment. Semiconductors grew at an average annual rate of 35.3 percent in 2005–2006, while computers and communications equipment expanded at roughly half that rate.

The prices of high-technology goods continue to decline. The particularly steep fall in computer prices is partly a reflection of the fact that this price series controls for quality changes in a wide range of computer products, whereas the semiconductor and communications equipment indices contain fewer quality adjustments. Recent studies (here and here) suggest that the published price indices for semiconductor and communications equipment shown in the graph understate real price declines. Nonetheless, it is clear that consumers continue to benefit from falling prices in all these industries.

Although high-technology production advanced markedly in these industries over the last several years, employment did not. Between 2001 and 2004, these industries shed more than 460,000 workers, a 36.6 percent decline. In the last two years, employment has stabilized but at a significantly lower level than in 2000. Employment growth in 2005 and 2006 amounted to a net gain of only 10,000 workers, with the increase occurring entirely in semiconductors.