Two consecutive quarters of declining GDP is the definition of recession and a general cause of economic panic which can make further decline a self fulfilling prophecy. But there is something I don’t understand….

I am sure that most of you have heard of ‘Moore’s Law’ – the prediction by the Intel executive that the price of computer chips would halve every 18 months and the their power would double.  This exponential rise in power has been more than fulfilled for the last 30 years and shows no signs of slowing down, giving rise to a massive  2^20 growth in computing power or a million times growth in power.

And, of course, it is not just computers that are seeing that kind of exponential growth in power. Texting went from zero to 8trillion texts per year in just 20 years which is a doubling of popularity every 3 months over the entire period. Even more extra-ordinary – it took $3bn and several years to decrypt the first genome of a human being.  It is expected that within 2 years the cost will be down to under $1 and it will be done in under an hour. So what are the economic consequences of these phenomenal increases in power?

If just 10% of the GDP of the economy were to reduce costs by 50%, the impact would be a 5% cut in our GDP.

Can some economist explain to me why this fabulous growth in productivity is a cause for recessionary angst instead of universal celebration?