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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Skeet Shipman who wrote (56174)	11/7/2001 10:16:31 AM
From: stan_hughes	Respond to of 94695

Skeet - One caveat - productivity is defined as output per hour worked. When everybody was working a zillion hours per week and effectively not recording it, that made the productivity measurements look great because it reflected a kind of "something for nothing" circumstance. However, as we now initially throw people out of work, hours worked are being removed from the productivity equation despite the fact that the economic effects of their past work efforts still linger in the pipeline. Therefore, in the early stages of a slowdown, you should get productivity data that still looks good because output is still acceptable while the paid hours just sort of disappear. IMO that's the data you're seeing now. Eventually the lost output from a reduced workforce will show up (or more correctly, not show up) in the stats, but by then total hours worked will likely have stabilized. That means in the coming quarters dividing an ever shrinking output figure into essentially a static labor hours quotient, forcing the productivity data to trend down. Maybe this means little to most people, other than suggesting that productivity is a lagging indicator. Then again, it could spook a lot of institutional investors who seem to be bidding up stocks now seemingly in the hope that we'll soon return to the glory days of the late 90s. IMO the Y2K-founded surge in IT upgrades was a temporary bubble and those times are long gone, especially now that profits are on the skids BWTFDIK