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To: dbblg who wrote (66274)	7/5/1999 8:09:00 PM
From: Sam Sara	Respond to of 164687

Exerpt from briefing.com re:recent unemployment report- good news is their take on the matter: Greenspan argued for higher rates on the basis of the notion that the economy could not grow more than 3% without producing inflation. That 3% growth potential is derived from assumptions of 2% productivity growth and 1% labor force growth. The latter is largely a function of demographics; the former is difficult to estimate. But that 2% figure of Greenspan's is looking increasingly conservative. In today's report, we saw that aggregate hours worked in Q2 rose at an annualized rate of just 0.7%, the slowest in four years. So we have seen a substantial slowdown in hours worked even as economic growth has remained strong. This tells us that productivity growth must be accelerating. And indeed it is -- when Q2 figures are released in about a month, we will see an increase of better than 3%, bringing the year/year trend in productivity growth up to 3-3.5%. If you think that the difference between this 3-3.5% number and Greenspan's 2% is the subject of a trivia question, you're wrong. This is the difference between an economy that can sustain noninflationary growth of 4% and one that cannot. And it is the difference between steady Fed policy and more Fed tightening.