FalstaffProductivity is one area where of the economy that can not be compelled to improve by those royal powers above. Or as Falstaff once said to Prince Harry over a cup of sack:

"What, upon compulsion? 'Zounds, an I were at the strappado, or all the racks in the world, I would not tell you on compulsion. Give you a reason on compulsion! If reasons were as plentiful as blackberries, I would give no man a reason upon compulsion, I."

So Q/Q annualized rate of 8.1% does give me a sense of optimism as that and innovation account for our improved standard of living, wealth and many positive things over the last century.

I looked ahead to SPY performance 1 and 2 quarters later, but the results are not noteworthy in fact there is a negative relationship:

1 month ahead SPY quarter predicted by Prod, correl -.11, slope -.27, intercept .82, rsq .012

2 months ahead SPY quarter predicted by Prod, correl -.04, slope -.12,intercept .41, rsq .002

Serial correl of quarterly Prod -.15, Average annualized rate 2.7%
Serial correl of quarterly SPY .30, Average quarter .3%

Data 1999-2009

Still it is a big headline number, fourth largest over the period, though productivity never gets the same attention that employment will get tomorrow.


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