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To: Lizzie Tudor who wrote (159976)	2/14/2004 1:37:25 PM
From: Oeconomicus	Respond to of 164684

Productivity is a simple concept, Liz. Take US output and divide by units of labor input. You've speculated before that production of offshore labor is somehow getting counted in US output, but you have never provided any evidence to back that up. If you are so certain this has happened, then surely you can find something more concrete than vague references like "Steven Roach says so" or your simple hunches. The fact is that imports of services, like any other import, are deducted in arriving at GDP numbers (the "D" stands for domestic, you know). Can you show any empirical evidence to the contrary? BTW, there is a way, besides your theory of overstated GDP, that recent productivity numbers could be erroneously high. As I said, the other variable used in the calculation is units of labor input to generate the output. IOW, GDP is divided by hours worked and the result is productivity of labor. Well, guess where the hours worked numbers come from. The same establishment survey that many economists think is understating job gains over the last year or two, that's where. Perhaps, if the productivity numbers are overstated as you suggest, the problem is underestimation of hours worked, not overestimation of output by failing to deduct imports.