IMPEACHMENT TIME AGAIN :

Productivity Strong Despite Revisions : 2nd-Quarter Gain At 1.1% Annual Rate (John M. Berry, August 10, 2002, Washington Post)

Productivity gains slowed with economic growth in the second quarter, but in the past year, the amount of goods and services produced for each hour worked rose a very strong 4.7 percent, the Labor Department reported yesterday.

The department also revised productivity figures back to 1999 based on new estimates of the gross domestic product released last week by the Commerce Department. While productivity gains were lowered for 2000 and 2001, analysts said the new numbers still confirm a substantial improvement in the trend of productivity growth beginning in the late 1990s.

Productivity in the private non-farm portion of the economy increased at a 1.1 percent annual rate April through June, after a remarkable surge at an 8.6 percent rate in the first three months of the year.

"Some may read this as a sign that the productivity revival is faltering," said economist Gerald D. Cohen of Merrill Lynch & Co. in New York. "But productivity accounted for all the GDP growth in the second quarter and is up 4.7 percent during the past year, more than double the rate of GDP growth."

Cohen said that based on his firm's forecast for the economy in the second half of this year, productivity should rise at about a 4 percent annual rate.

If the Fed doesn't cut rates tomorrow they should be impeached. This kind of continued productivity growth, coupled with our massive imports of goods from abroad, and the stability of wages along with the decline in stock values, has to be having a hugely deflationary effect on the economy. We keep being able to make more and more goods in the same time (productivity), are able to buy goods from others cheaper than we used to make them here (imports), aren't getting paid more (wages), and have less wealth than we did two years ago (stock declines). Where in the name of all that's holy does the Fed think inflationary pressures are going to come from? Sure, if there's a war in the Middle East there'll be a spike in oil prices, but that's completely artificial and will be temporary. In fact, once Saddam, the mullahs in Iran, and the Sauds in Arabia are gone, these countries will have to ramp up production drastically to pay for rebuilding and revitalizing their economies. Somebody needs to tell Alan Greenspan it's not 1973 anymore. Posted by Orrin Judd at August 12, 2002 1:13 PM