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To: Frodo Baxter who wrote (1496)	5/8/1999 7:48:00 AM
From: N	Read Replies (1) \| Respond to of 3536

Nah, more billion dollar Stealth bombers! They're so cool... Nah...all we need to wait for is for Jamie Shea to announce (in french or english): "We, Nato, have now issued our ten thousandth briefing. Be it now declared -- the war in Yugoslavia is over". Nancy

To: Frodo Baxter who wrote (1496)	5/11/1999 2:58:00 PM
From: Sam	Respond to of 3536

<<You know I'm not going to let that slide. Kasich, in particular, can make the cuts stick. Of course, since his probability of nomination is zero, I just hope George Jr. has the guts to tap him as Veep or OMB or some such.>> Delayed reaction, yes I knew that. But Kasich, no way. I'm a newly minted Buckeye now, and I'm damned proud of it, too, but JK is a lightening rod, he's almost like Newt Jr, IMO. GB Jr. would prefer someone like, well, perhaps DQ for another go-around?<vvbg> Meanwhile, the Labor Dept reports that productivity grew sharply in Q1 at 4%, and unit costs dropped .4%. And the 5 yr auction was lousy in response, going off at 5.36% or so (I'm not actually sure of the final number). Inflation is nowhere to be seen, and people still think that the 30 yr should be close to 6%, the 5 yr over 5 1/4%? I find that not quite as amazing as tscm et al, but still, pretty remarkable. Productivity soars 4% in 1st quarter Strong gain is likely to calm fears of inflation hawks By Rex Nutting, CBS MarketWatch Last Update: 12:59 PM ET May 11, 1999 Bond Report WASHINGTON (CBS.MW) -- U.S. productivity soared in the first three months of the year, as businesses exceeded economists' expectations with a brand of growth that will soothe fears of many inflation hawks. The Labor Department reported Tuesday that productivity in American nonfarm businesses jumped at annual rate of 4 percent. Unit labor costs rose at a 0.3 percent rate. Real compensation per hour rose 2.8 percent. A panel of economists surveyed by CBS.MarketWatch.com forecast a gain of 3.1 percent in productivity. Last week, in comments that spooked the bond market, Alan Greenspan mused that the so-called Goldilocks economy of strong growth and low inflation would end when productivity gains faltered. However, Tuesday's report shows that the expansion still has plenty of legs. See related story. "This should put everyone's mind at ease about inflation and about what the Fed is going to do," said Irwin Kellner, chief economist at CBS.MarketWatch and the Weller professor of economics at Hofstra University. Kellner said bond yields ought to fall as the market conforms to the reality of continued low inflation. "There is a real warning sign in the data," said Joel Naroff of Naroff Economic Advisors in Holland, Pa. Tight labor markets are forcing real compensation gains higher, he said "For now, firms have the labor cost situation under control, but the imbalances in the market are real and unless the economy slows, the monetary authorities will have to decide whether they can continue to allow the compensation gains to accelerate," Naroff said. "It's OK for compensation to go up as long as it's offset by higher productivity," Kellner said. In the fourth quarter, productivity rose at a revised 4.3 percent rate, down from the 4.6 percent previously estimated. Unit labor costs fell 0.4 percent, revised from the 1.1 percent decline previously estimated. Productivity is perhaps the most important factor in economic growth, but one of the least understood. Productivity is a measure of how much effort (in labor and capital) it takes to produce a given unit of output. Higher productivity is the only way living standards can improve in the long run. Economists regard rising wages and profits as non-inflationary as long as they're grounded in higher productivity. If businesses are more productive, they can afford to pay their workers more and they can keep more of their revenue as profits without raising prices. Because quarterly productivity reports are backward-looking and tough to measure, financial markets generally pay them little mind. However, the strong productivity gains in the first quarter ought to reassure a jittery bond market that there is no reason for the Fed to move to higher rates. The bond market barely reacted to the report. See Bond Report. Productivity in manufacturing rose 5.8 percent in the first quarter, while unit labor costs fell 0.9 percent. Manufacturing has lost more than 400,000 workers in the past year, yet output is up 2.2 percent.