In the stock market since March, there was a positive rally because of rising unemployment. Fear of its high rate of increased shares of stock, due to the influence of these corporate profits. U.S. corporate sector has reduced spending in the past year through the elimination of more than 8 million jobs, as well as by reducing the working week to a record low. During the past 18 months the U.S. economy has lost a third more jobs than predicted by econometric models based on the reduction of real GDP.
The result of a shrinking workforce, a 4% increase in productivity during the past year and 8,1% in the third quarter. Such accomplishments - are unique in the period of severe recession, they make American companies more competitive, stimulating the export boom. During the mild 2000-2001 recession also had a surge of productivity, however, the economy lost jobs within two years after the formal end of the recession.
There is a very modest wage growth since the downturn began, with a simultaneous drop in labor costs to 2.5% in the third quarter of the year. During severe recessions of 1973-1975 and 1981-1982 payments grew steadily, despite the rapid decline in output. Inflation was much higher, so firms were harder to contain costs.
As a result of successful containment of prices during this recession, the intangible profits of companies showed the rally at 8% since March. If the U.S. economy could reach 3% growth in output in the next year is likely to grow earnings by 30-40%.
The question arises: whether the company was not fired too many people over the past year? The output begins to recover, and perhaps, companies will need to re-open vacancies. Some large producers urged workers to return, however, smaller employers are reluctant due to concerns about the possible consequences of Obama's policy on taxes and health care.
The more important long-term question is whether companies will be able to maintain high performance during recovery. In the past, productivity grew by 4,5% - 6,2% in the first year of growth after the three previous recessions. Many economists believe that sustained growth of this indicator fell to 2-2,5% as compared with 3% five years ago, the causes of which are low growth of labor force and "uncertain" performance. However, if the organization can ensure the productivity growth of 3% or more, the trend rate of growth also remain close to 3%.
The question of productivity is critical to the economic policy of Obama. High Performance will reduce inflationary pressures, as well as the risk of an aggressive tightening of monetary policy the Fed.
Other countries do not repeat the success of the U.S. in matters of sustainable proizvodtelnosti. Germany has kept the unemployment rate with the help of grants for part-time. Grants to protect jobs, but have led to falling productivity by 7% after 6 years, during which Germany lost stepping up the pace because of the entry into the euro zone. The unemployment rate in Japan has increased to just 5.1%, as companies seek to dismiss part-time workers rather than permanent employees. As a result of restrictions on dismissals, the quantitative proportion of labor costs in value added increased to 78.6% from 58.9% a year ago. Japanese corporate profits fell by almost 80%.
These differences in productivity means that U.S. businesses will go down in the new year on 10-15% more competitive than Europe and Japan. These economic effects, coupled with a weak dollar should help the U.S. export boom as the restoration of the world economy.
Big trouble is that the Obama administration does not conduct extensive trade policies for the realization of export potential. His administration has missed an opportunity to play a leading role in the emerging trade negotiations in Doha, and was unable to conclude free trade agreements initiated by the Bush administration. The Democratic Party in Congress rejected protectionism, and the president will not change this situation, while his main priority remains the health care reform. If the president will fulfill its promises regarding employment, he must do the export opportunities that have arisen as a result of high productivity growth, also need to address the promotion of free trade.
By David Hale, the head of David Hale Global Economics
The result of a shrinking workforce, a 4% increase in productivity during the past year and 8,1% in the third quarter. Such accomplishments - are unique in the period of severe recession, they make American companies more competitive, stimulating the export boom. During the mild 2000-2001 recession also had a surge of productivity, however, the economy lost jobs within two years after the formal end of the recession.
There is a very modest wage growth since the downturn began, with a simultaneous drop in labor costs to 2.5% in the third quarter of the year. During severe recessions of 1973-1975 and 1981-1982 payments grew steadily, despite the rapid decline in output. Inflation was much higher, so firms were harder to contain costs.
As a result of successful containment of prices during this recession, the intangible profits of companies showed the rally at 8% since March. If the U.S. economy could reach 3% growth in output in the next year is likely to grow earnings by 30-40%.
The question arises: whether the company was not fired too many people over the past year? The output begins to recover, and perhaps, companies will need to re-open vacancies. Some large producers urged workers to return, however, smaller employers are reluctant due to concerns about the possible consequences of Obama's policy on taxes and health care.
The more important long-term question is whether companies will be able to maintain high performance during recovery. In the past, productivity grew by 4,5% - 6,2% in the first year of growth after the three previous recessions. Many economists believe that sustained growth of this indicator fell to 2-2,5% as compared with 3% five years ago, the causes of which are low growth of labor force and "uncertain" performance. However, if the organization can ensure the productivity growth of 3% or more, the trend rate of growth also remain close to 3%.
The question of productivity is critical to the economic policy of Obama. High Performance will reduce inflationary pressures, as well as the risk of an aggressive tightening of monetary policy the Fed.
Other countries do not repeat the success of the U.S. in matters of sustainable proizvodtelnosti. Germany has kept the unemployment rate with the help of grants for part-time. Grants to protect jobs, but have led to falling productivity by 7% after 6 years, during which Germany lost stepping up the pace because of the entry into the euro zone. The unemployment rate in Japan has increased to just 5.1%, as companies seek to dismiss part-time workers rather than permanent employees. As a result of restrictions on dismissals, the quantitative proportion of labor costs in value added increased to 78.6% from 58.9% a year ago. Japanese corporate profits fell by almost 80%.
These differences in productivity means that U.S. businesses will go down in the new year on 10-15% more competitive than Europe and Japan. These economic effects, coupled with a weak dollar should help the U.S. export boom as the restoration of the world economy.
Big trouble is that the Obama administration does not conduct extensive trade policies for the realization of export potential. His administration has missed an opportunity to play a leading role in the emerging trade negotiations in Doha, and was unable to conclude free trade agreements initiated by the Bush administration. The Democratic Party in Congress rejected protectionism, and the president will not change this situation, while his main priority remains the health care reform. If the president will fulfill its promises regarding employment, he must do the export opportunities that have arisen as a result of high productivity growth, also need to address the promotion of free trade.
By David Hale, the head of David Hale Global Economics
The Financial Times
December 10
December 10
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