“The economy’s quick recovery from recession, evinced by the latest reports from the Commerce Department and the Federal Reserve, has taken many experienced forecasters by surprise,” writes Daniel Altman in today’s New York Times.

“Their favorite explanation has been the unexpected resilience of consumers after the shock of Sept. 11. Yet at the end of last year, strong gains in productivity — the amount of goods the average American worker produces in an hour — also played an important and largely ignored role.”

“Yesterday, the Commerce Department released new figures showing a pickup of 1.6 percent in orders for manufactured goods in January, after an increase of 0.7 percent in December. Last week, the department revised its estimate of growth in gross domestic product for the final quarter of last year to 1.4 percent from 0.2 percent.”

“The beige book of reports from the Federal Reserve’s 12 districts, also released yesterday, described more signs of improvement in manufacturing, especially along the Eastern Seaboard and in auto- producing states like Michigan and Ohio. On the retail side, sales of home furnishings and appliances began to gain momentum in the Midwest. Though vacancies grew in commercial real estate across the country, home sales remained strong.”

“The Fed reported little change in labor markets, where employers cut bonuses and delayed raises in January and February. Contrary to the expectations of economists, however, the Fed’s contacts hinted that the economy would soon start creating more jobs than it lost.”

“Even though the private sector has shed more than a million jobs, companies have still managed to turn out the goods and services consumers want, at prices they can afford, because of rising productivity.”

“Forecasters who doubted the economy’s ability to grow at the end of last year may not have taken into account the effects of productivity because its growth was so unusual.”

” ‘If productivity grows, the economy does well,’ said Edward C. Prescott, a professor at the University of Minnesota and senior adviser to the Federal Reserve Bank of Minneapolis. Mr. Prescott contended that Wall Street’s seers did not pay enough attention to productivity.”

” ‘I don’t think they had a good basis for their forecasts,’ Professor Prescott said. ‘Sometimes pessimism or optimism gets popular, and it’s contagious.’ “