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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Lee who wrote (3080)	5/8/2001 12:58:48 PM
From: Ahda	Read Replies (1) \| Respond to of 3536

Tuesday May 8, 9:20 am Eastern Time U.S. Productivity Dips in First Quarter By Mark Egan WASHINGTON (Reuters) - The productivity of U.S. workers fell for the first time in six years during the first three months of the year, as unit labor costs grew at the fastest pace in over three years, the government said on Tuesday. The Labor Department said productivity for workers outside the farm sector fell at an annual rate of 0.1 percent in the first quarter, well below the 2 percent advance seen during the final three months of last year. Productivity, measuring the amount of goods and services workers produce per hour, is crucial to rising standards of living and has been credited as a vital part of the long-lasting U.S. expansion. It has fallen steadily since hitting a recent peak of a 6.3 percent annual gain during the April to June period of last year. I look at these figures and think of expansion due to less costs imports reduced inflation and whoops gas went up took from that reduction. When workers' productivity grows, companies can produce more while holding down costs. Productivity last declined during the first quarter of 1995 when it contracted at a 0.8 percent annual pace. I wonder if these figures are inclusive of hours as I think there is now a trend to cut back hours in lieu of reducing the amount of employees. From my point of view I fear we will see more inflation . The result of costs exceeding profit extends itself into the consumers world. Due to our high use of debt in the consumer world it will take longer to manifest itself as less monies and curtailed spending. Our greatest advantage of income I feel has been in the tech arena. There are two things I view as one here the bubble where the dot coms were being built prior to need established and hope that once there the need would drive growth. The Fed at the same time a new economy where you can create need by use of dollar flow and interest rates. The similarity between the two is both created inflated value. The mechanism behind both was different but the results appear to be heading in the same direction. Productivity allowed growth but there has been a decrease in manufacturing and jobs both. During our manufacturing peak our overall standard of living increased. As this ended of our economic structure found greater advantage in labor elsewhere. Our standard of living was maintained due to additional hours worked and the double income that became necessary to just satisfy basic needs of a family of four. Problem is I think it became a bit more like a double income need but triple hours standard with the added bonus of non inflation due to costs being less in other areas ot the world. The cost of housing in areas that have experienced tech and financial growth has sky rocketed. There could be numerous loans on books of corporations that have assisted employees to purchase houses. At the same time the corporate world due to high costs is trying to reduce costs by using labor units elsewhere. This creates a high potential for a drop in upper income housing. The difference in this particular type of slow down compared to when manufacturing started to out source is the manufacturers attempted to retrained it employees. In the highly trained the question becomes what do you retrain too? At what point this will become truly visible in our economy is hard to say due to debt extension. I feel there is high potential for global growth that will continue to increase for many years until overseas cost starts to exceed profit. On this nations level my preference would have been a swift sharp slow down in this nation that made us competitive in a hurry. In attempting to engineer a constant in economic force I feel the market is no longer free and perhaps this has become our own brand of socialism in contrast to capitalism. Your figures might be low.