>In a recent SF Chron article on productivity, the author wrote:
>
>"Such fast-growing productivity is a tremendous boon for society,
>economists stress. While jobs might disappear in the short run,
>higher output per worker spurs growth that in the long run creates
>more opportunity.
>
>Higher productivity generates profit that is often reinvested in new
>job- creating activities, they note."
Often, maybe, but the productivity boom in recent quarters is mainly the result of working the existing workforce a lot harder without additional pay. If that's a miracle, we need a new definition.
>I think that the statement that profit is "often" reinvested in new
>job-creating activities deserves closer scrutiny. First, it says
>nothing about where these jobs are going to be. Second, I actually
>don't think that's the trend. I read recently, I think it was in
>Barrons, that the profits are not being reinvested but used largely
>for speculation.
>
>Does anyone have data on this?
I haven't updated my spreadsheets with the new NIPA revisions, but profits have been rising strongly while investment and hiring haven't. There's a chance that could change soon - businesspeople seem a lot more skeptical about the durability of the recovery than do Wall Street types, but if they gain confidence they may start spending again. It's one of the big questions of early 2004, in fact.
Doug