Sunday, August 03, 2008

Strong US productivity

Strong Productivity Defies Trend

This article is well worth the read. Why am I posting something bullish? 1. Its not going to be *that* bad and 2. this is one of the trends that will pull us out of the recession we're in... By say late 2010 or 2011.

The whole article is worth reading and there is a graph in there worthy of close examination. (Sorry, subscription required, but sometimes the links work without an account.)
The productivity growth in exports is well above the economywide average. In a paper last year, a group of economists found that manufacturing plants involved in producing exports had significantly higher labor productivity than those that weren't. The same holds for services.

The only way we're going to pull out of this is export oriented jobs. The obvious candidates would be banking (or other financial), manufacturing, or tourism. The other choice is high taxes that drive skilled workers to become expatriates who send back cash to their families (a la the illegal immigrant labor force that upholds Mexico's economy).

I personally believe we'll have a partial resurgence of manufacturing in the US. Yes... I understand there is a long term trend to higher "value added" jobs. But we went too far and did so too fast. Quite bluntly, we replaced manufacturing with unneeded sales jobs! Whiskey Tango Foxtrot? There is an internet out there to do much of that; I believe this recession will drive consumers to develop 'low purchase cost habits' that won't go away for a while. Well... not completely. The sheeple do have a way of proving that Ditech's ads really are nothing more that ironic poetry for profit.

We're approaching the October through February time frame. That will be a time of scary news. So in a way its time to pull back and realize that when J6P starts stampeding with his fellow lemmings towards the cliff... Then there is blood in the streets and its time to start buying. (Not this winter... NEXT winter. This winter is the warm up act.) 2009 will be the year of the greatest price drops of this downturn.

Got Popcorn?

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