Les,
I'm not so sure why everyone is so focused on what the true productivity figures are. They have little real impact on the values in the stock market. To begin with you have to be crazy to trust them. They are highly subjective and wide open to the usual statistical game playing by vested interests.
Second, whatever the true productivity level is, it eventually shows up in the growth of corporate profits and other income streams (although not necessarily evenly).
On a peak to peak basis corporate profit growth in the 90s was no faster than is typical of other business cycles. That "only average" performance came despite a few small tail winds (like falling interest rates) and perhaps a generally declining quality of earnings. (options, pensions, writedowns, trading profits)
The economy may be changing, but that is nothing new. As Warren Buffet stated recently, cars, radios, televisions, trains, light bulbs, airplanes and many other inventions permanently changed the way we do business and dramatically increased standards of living.
If it makes the "Bulls" happy to call every great invention a "new era" then so be it. But the PC, software, and the internet, as much as I love them, don't justify what's going on in the stock market based on current earnings, interest rates, and profit growth prospects. It's a "new era" if your definition of a one is any important change that occurs. (like every 15 years on average)
Wayne |
