This report “shows us that the benefits of IT are quickly spreading across the board, and eventually will touch every business, from the smallest mom-and-pop shop to the biggest Fortune 100,” Daley said.

“The first two reports were called the ‘The Emerging Digital Economy,’” he continued. “Today, after just 26 months, we dropped the ‘emerging’ because it’s here. In fact, it has become the driving force of the American economy.”

“In the era of the Internet and other information technologies, the American economy may be able to achieve rates of economic growth that are higher and more sustained than in the past,” said Robert J. Shapiro, Undersecretary of Commerce, Economic Services Administration, “with stronger income gains and lower inflation and unemployment than we have seen for a generation.”

What follows are some highlights from the report:

• IT accounts for half or more of the recent acceleration in U.S. productivity growth, from 1.4% per year during 1973-95 to 2.8% since 1995.

• Technological advances have significantly lowered costs of computers and communications. Declines in computer prices, which were already roughly 12% per year on average from 1987-94, grew to 26% per year during 1995-99.

• The decline in IT prices has directly lowered inflation by an average 0.5 percentage points.

• Real business investment in IT equipment and software more than doubled between 1995 and 99, from $243 billion to $510 billion. IT accounts for two-thirds of the growth in overall business investment in recent years.

• The Internet has flourished as technology has reduced the costs of computer power, data storage, and connectivity, making the advantages of electronic commerce and electronic business practices affordable to small- and medium-sized firms.

• In the past year, the number of Americans online rose by 40%.