I'm watching CNN financial and an analyst was saying that productivity per employee has gone from about $140 to $430 (didn't catch exact $ but these are close) in the last year. Said this kind of improvement would continue for another 3 years.

My question. Productivity increases have been substantial in the last few years and I acknowledge that this is contributing enormously to the "healthy economy" (debt, inflation, oil prices, etc. aside). Productivity improvements are what are cited over and over as the main ingredient. Is it realistic to believe that these vast improvements can continue? Just how much can computers do? If inflation hits, won't productivity per employee start slipping? How are the productivity stats prepared? Have there been any "definition" alterations recently, as there have been with CPI and Savings rates?

Also, anyone else notice that there are a lot more analysts on CNNF and CNBC sounding bearish?

Finally, are there any other web sites that you folks know of that focus on economy / stock market?

-- Wondering about (economics@under.question), February 03, 2000

Answers

Didn't ask that last question in enough detail - I'm looking web sites that have forums on the economy; good discussions about the economy...

-- Wondering About (economics@under.question), February 03, 2000.

Please remember that productivity is only one issue. If productivity gains aren't shared with workers (as higher wages) the consumer driven economy will eventually crumble. Wages must shadow productivity gains closely before those gains are translated into a economic strength. Here is a link to a much better explanation than I can give you. You need to read all four parts.

All you ever wanted to know about bull and bear markets and a bubble economy!

Good Hunting!

-- Maher Shalalhashbaz (mahershalalhasshbaz@mail.com), February 03, 2000.

99% of the increases in productivity have come in MANUFACTURING computers. The rest of the economy has been flat with respect to productivity. Computers aren't making us more productive. We're just getting more productive at making computers.

The whole new-economy stuff is a scam. Inflation is low because debt keeps getting bigger, pumping money into money-losing, sell-below- cost firms like buy.com and amazon.com which put competitive pressure on regular retailers to keep prices low. This balances the wealth effect and the tight labor market.

When new money (and debt) stops pouring into the economy, the scam is up. Stocks may plummet and wealth may disappear, but the debt's not going anywhere. And the US Congress is passing a law, while we speak, to make it harder to default on these loans.

-- she_gold (she@gold.com), February 03, 2000.

I'm not an expert on this, but here is what I read somewhere, regarding "pumping money into money-losing, sell-below- cost firms like buy.com and amazon.com".

I read that these firms make their money on something like this: holding onto your payment from "when the order is sent to the manufacturer/printer" to "when the manufacturer sends the order to the customer and collects payment" from Amazon. They make interest on that money, or something like that--their function is a facilitator of exchange like any other merchant. They're just more efficient with less overhead. For example, Amazon doesn't have inventory costs, etc. I buy from Amazon myself, because its much easier and cheaper than traditional methods, although I also peruse traditional bookstores from time to time.

As far as productivity, or increases in computer speed/memory, my brother-in-law, an electrical engineer, says that the rate of increase (currently doubling every 18 months, I think?) will decrease, as the rate of increase did in materials engineering when that field matured. The computer field just hasn't matured yet.

Personally I think the next source of innovation will be in life sciences and chemistry, especially in the field of genetics applied to biological machines/computers, the designs for which can be coopted from nature. I don't know if there is a limit in that field, apart from our ability to manipulate/control-the-effects, etc., of the machinery of life around us.

Assuming our civilization holds together. :-)

-- S. Kohl (kohl@hcpd.com), February 03, 2000.

Amazon does not sell below cost. It sells 20% above cost, like walmart. It is losing money due to heavy advertising,which is driving incredible revenue growth(revenues which can be repeated even without those marketing expenses next year since most amzn customers are repeat purchase buyers)

-- No Name (no@email.com), February 03, 2000.