Wednesday, May 16, 2007

Going For The Quick Fix

This depresses me:

U.S. firms could build plants here, but fewer are doing so because it's cheaper to make goods elsewhere.

That's had a particularly negative effect on U.S. productivity, van Dijk said. "We're starting to see a sharp decline in productivity. Spending on equipment and software is growing, but nowhere near the rate you'd normally expect at this stage of the economic cycle."

His fears are shared by Stephen Biggar, director of U.S. equity research at S&P. "Companies are limiting expenses, but they're also limiting growth opportunities down the road. At some point it'll catch up to them," Biggar said.

Productivity growth, which easily topped 2% or 3% for much of the past decade, slowed to 1.1% in the first quarter vs. a year earlier.

Maybe I worry too much. Maybe it's just another business cycle. Maybe there's some master pan-corporate plan. I don't think so, tho. I think this kind of short term thinking is going to stay in vogue as long as big biz sets themselves up as bankers instead of producers of goods and services.

Anyway, read the whole thing.


Post a Comment

Links to this post:

Create a Link

<< Home