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To: Hawkmoon who wrote (3082)	5/8/2001 2:35:52 PM
From: Ahda	Read Replies (1) \| Respond to of 3536

Productivity is directly linked to the quantity of goods workers produce per labor hour performed. True When GDP growth is in decline and fewer products are produced, obviously productivity will decrease because the same number of people are now producing fewer products. The cost factor increases this is inflationary. When the Fed finally arrives at a point with interest rates where businesses are once more willing to invest and expand their businesses, based upon greater ability to generate profits on borrowed expansion capital, then productivity would increase commensurately I believe business are addressing this in the form of expanding elsewhere where costs are less. This produces a certain amount of conflict with growth and the prosperity of our nation. When you start laying off full-time staff and downsizing operations to a proper equilibrium between production and labor force, productivity will once more properly reflect potential. In a singular nation this is a circle that self propels. In a global economy the slackening period allows for others to become more mature in their ability. The chance of return to a limited nation cycle i feel becomes less and less due to the global cycle. This leads me to believe that a slowdown is much more costly to growth than it was.

To: Hawkmoon who wrote (3082)	5/8/2001 3:35:31 PM
From: Robert Douglas	Respond to of 3536

When the Fed finally arrives at a point with interest rates where businesses are once more willing to invest and expand their businesses, based upon greater ability to generate profits on borrowed expansion capital, then productivity would increase commensurately. Interest rates are only one factor in the decision to spend. The other two are profits and capacity utilization. Right now excess capacity is still too great to generate demand for expansion. And, as we have been discussing, profits will be squeezed during this period of rising unit labor costs. We can't rely on investment to turn around the economy. This business cycle was driven by investment and capacity utilization peaked out at a lower level than in any recession of the past 40 years.