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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Madarasz who wrote (3948)	5/31/2001 12:22:25 PM
From: John Pitera	Read Replies (1) of 33421

Excellent point John..... Gross's article is excellent, I may post the whole thing for posterity. Morgan Stanley's Stephen Roach has been making this same point, I have posted a piece or two by him discussing the possibility of a "productivity myth". Message 15354883 in this post he talks extensively about this MYTH potential When I think of productivity miracles, my mind always drifts back to the 1960s. That, of course, was the mother of all productivity booms in the United States -- average gains of 3.6% over the 1961-68 interval. Yet when that cycle started to fade, there was talk of the cushion of productivity resilience, as well. The numbers seemed to bear that out: Real GDP growth slowed from its peak-of-cycle growth rate of 8.5% (y-o-y) in 1Q66 to 3.5% two years later; yet productivity was still cruising at 3.4% in early 1968. In the end, of course, this resilience turned out to be short lived. America was on the brink of nearly two decades of its worst productivity performance in the modern era. Alan Greenspan has correctly singled out productivity growth as the single most important feature of any economy. It’s hard to argue that point. But it’s another thing altogether to leap from theory to verifiable truth. The productivity resilience of today’s US economy has yet to be tested. Moreover, if you want to believe the numbers -- and I don’t -- the next tick on the productivity clock could well be a disappointing one at that. It is reckless to hang the future of the US economy on dubious productivity statistics. The same can be said of the long-term growth estimates that are now shaping the great budget debate. The jury remains out on the true test -- if it ever really occurs. This is also by Roach and talks about creating the Asset bubble and the Technology overcapacity...... Message 15712817

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