Digital Economy 2003 (DE2003) is the Department’s fifth annual report on conditions in U.S. information technology (IT) industries and the effects of IT on national economic performance. Each of these reports has addressed questions that economists have sometimes found difficult to answer. Early nineteenth-century economists earned a reputation as practitioners of the “dismal science” by underestimating the ability of technological innovation to drive faster than expected economic growth. This year, the basic analytic challenge has been complicated by an atypical recovery. Productivity growth has been remarkably strong, output growth has gathered impressive momentum, and prices remain low. But employment has lagged. DE2003 examines IT’s role in these unusual developments.