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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (20440)	10/21/2004 6:52:50 PM
From: ild	Read Replies (1) \| Respond to of 110194

From today's ContraryInvestor: Yes, in the current cycle, we're experiencing the best productivity growth of any economic recovery cycle of the last thirty years at least. And the primary reason for this is that we're currently experiencing the worst payroll and unit labor cost recovery experience of the last thirty years at least. So although the current recovery in after-tax corporate profits looks quite similar to the profit recoveries of the mid-1970's and early 1980's, the primary drivers for the current profit recovery are completely different than those two prior cycles. The current cycle is built on dramatic cost cutting. ... Without sounding melodramatic, it is virtually crystal clear to us that a very meaningful degree of our recent and current headline productivity experience in this country is owed to the influence of changing global capital flow and labor flow dynamics. During this recovery cycle, it's been foreign labor and foreign capital that have made the US productivity miracle possible. But what is also true is that from a longer term standpoint, these productivity numbers are no miracle for the US economy at all. In fact, it's something quite the opposite. What the productivity numbers over the last three years have really measured is the pressure on US domestic labor markets and associated wage gains, or lack thereof to be more correct. Some miracle. We fully expect this "miracle" to be seen for what it is at some point as perceptions regarding the character of the current economic recovery are bound to shift ahead. They have a bunch of charts and narrative to support those views.