The Social Security Trustees Explain Their Productivity Assumptions

The Social Security Trustees explain their long-run productivity growth assumptions. From pp. 82-83 of the 2005 Trustees' Report:

1. Productivity Assumptions

Total U.S. economy productivity is defined as the ratio of real gross domestic product (GDP) to hours worked by all workers. The rate of change in total productivity is a major determinant in the growth of average earnings. For the 40 years from 1963 to 2003, annual increases in total productivity averaged 1.8 percent, the result of average annual increases of 2.5, 1.1, 1.5, and 2.0 percent for the 10-year periods 1963-73, 1973-83, 1983-93, and 1993-2003, respectively.

However, productivity growth can vary substantially within economic cycles. Therefore, it is more useful to consider historical average growth rates for complete economic cycles. The annual increase in total productivity averaged 1.6 percent over the last four complete economic cycles (measured from peak to peak), covering the 34-year period from 1966 to 2000. The annual increase in total productivity averaged 2.2, 1.2, 1.3, and 1.6 percent over the business cycles 1966-73, 1973-78, 1978-89, 1989-2000, respectively. The ultimate annual increases in productivity are assumed to be 1.9, 1.6, and 1.3 percent for the low cost, intermediate, and high cost assumptions, respectively. These are the same as the ultimate rates assumed for the 2004 report.

One would think that the fact that productivity growth has averaged 3.0% per year in the four years since 2000 would be worth a mention. One would expect some reason for completely throwing away the last four years' worth of data on productivity.

But it isn't there.

What would happen if the Trustees' Report had forecast productivity growth of 1.8% per year? How different would the numbers be? My back-of-the-envelope is that it would knock a bit more than a quarter of a percentage point off the 75-year actuarial deficit--reduce it down to 1.5% from the 1.8% of taxable payroll in the Trustees' Report.

Small differences, yes. But we've had good productivity news in the past four years: the Trustees' Report should recognize it.

---

UPDATE: Paul Krugman comments:

[T]he slight deterioriation in the near-term [Social Security] outlook is the result of a strange asymmetry between what is updated to reflect recent data, and what isn't.... [T]wo very recent events affect the projections for many years to come.... this year's [substantially] oil [price]-driven inflation rate leads to a reduction in the assumed real wage rate in all future periods... this year's low real interest rate leads to lower assumed earnings [on] the trust fund for a very long time.... On the other side, high productivity growth since 2000... seems like big news... [but] isn't factored in at all. The reason is that the trustees use an average over the past four "full business cycles," measured from peak to peak (Section IV.B.7).... [T]hey won't take the good productivity news since 2000 into account [at all in forecasting the future] until the economy [begins] another recession. There's something very wrong with that...

Comments

[spencer]

From 1948 to 1974 productivity growth in the nonfarm business economy was 3.0%. From 1974 to 1994 it was 1.5% and since 1994 it has been 3.0%, for an average since 1948 of 2.5%. This means that in 20 years out of 56 years productivity growth was 1.5% and in 36 years productivity growth was 3.0%. By using the average of the last four cycles they are giving the period of low productivity a 50% weight in their calculation and so creating a very significant downward bias to the productivity assumption.

Moreover, I still have conceptional proplems with how they estimate productivity. The BLS does not calculate productivity for government and nonprofits employees--
it just assumes productivity is zero and that output is equal to inputs in estimating growth in these sectors.
There are both conceptual and pratical reasons why they do this. For example,as a former Marine I claim one Marine is worth 2 GIs, 3 sailors, or 5 airman. Now other will disagree, but how you value the output of the military faces both problems.

But it looks to me as if SS has just added the productivity growth in business and the assumed zero
productivity in govt and nonprofits to get a
lower estimate of productivity growth.

I am not sure, but this does not seem to be a valid approach to the issue of estimating productivity and also creates a significant downward bias to the productivity assumption.

[Bruce Webb]

http://www.ssa.gov/OACT/TR/TR05/trLOT.html List of Tables from 2005 Report, handy for bookmarking/favoritizing.

The Trustees just dug in their heels. I am looking at my favorite table in the whole world: Table V.B1 - Principal Economic Assumptions and am frankly stunned. They simply refused to move the numbers. 2005 Low Cost was left at 2.1%. This model predicted 2.8% for 2004, reality returned 3.3% and yet the best number they can come up with for 2005 in their "optimistic" model was 2.1%. This despite a strong first quarter.

I think this validates my assertion that Low Cost is pegged to outcome. Once again 2005 Low Cost shows Social Security fully funded with a flat trust fund ratio:
http://www.ssa.gov/OACT/TR/TR05/II_project.html#wp106217
They simply refuse to show any model returning an overfunded Trust Fund.

The problem for the Trustees is that this establishes a very low ceiling for the Intermediate Cost alternative. The public at large will probably never become aware of the existence of Low Cost, but they will be aware of its indirect effects. By definition Intermediate Cost has to have numbers more pessimistic than Low Cost, and there has to be some separation between the models to justify the concept of "range". The result is stark. Per the Trustees despite this series of growth numbers from 2002 to 2004: 3.2%, 3.5%, 3.3%, their best guess for 2005 to 2007 is 2.0%, 2.0%, 1.8%. Why we should expect productivity growth to dramatically slow to 60% of the rate we have experienced over the last three years is simply left unexplained.

Privatizers are now faced with defending 2.0% growth for 2005 to justify "crisis" and still have to convince us they can return 6.5% on stocks in the face of some pretty bleak numbers. The "no economist left behind" challenge just got a lot tougher.

[Dave]

First, Krugman is being dishonest. The long-run real wage assumption is 1.1%, same as it was in last year's report. Yes, it's starting from a lower base, because that's history and it _really_ happened. But he makes it sound like somehow the Trustees changed their real wage assumption, which isn't the case. I know this stuff pretty well, and I had to read it a few times to get what he was really saying.

And you're wrong, there is a mention: "As with other assumptions, a range of opinions exists among experts. We will continue to closely monitor experience in this area, particularly in light of recent rapid productivity growth that is not fully explained."
http://www.ssa.gov/OACT/TR/TR05/V_economic.html#wp131307

We get it. You disagree with the Trustees' productivity assumption. This a _75-year_ projection, and people will have different opinions.

Recent history is important. But we also had a 20+ year period (not too long ago) with really poor productivity growth. Will that happen again some time over the next 75 years? Who knows? You say 1.8, the 2003 Technical Panel (http://www.ssab.gov/NEW/documents/2003TechnicalPanelRept.pdf) says 1.7, the Trustees say 1.6. A few years ago the 1999 Technical Panel said 1.4. (http://www.ssab.gov/NEW/Publications/Financing/tech99.pdf).

It's a reasonable difference of opinion, not a plot. Move on.

[RonK, Seattle]

As anticipated and discussed in comments at MaxSepak, I think this is the maximally questionable assumption. A current-year lag in expected RWD is assumed to persist indefinitely, rather than bounce back form in the next couple of years.

This knocks infinite-horizon program income down by a raw percent.

As to future productivity, I expect this web thingie to blow the roof off historic measures (as it has recently), by virtue of increased mobility of know-how.

[Dan Ryan]

The Trustees are being consistent in their handling of productivity. Ignoring the period since the beginning of the current cycle is kinda nutty, but it's how it's always been done.

Dave - the Trustee's productivity calculation runs from 1966-2000, so it is heavily weighted down by the productivity slowdown of the 1970s & 1980s.

[kharris]

Let's assume the best of will on the part of the Trustees (an assumption that was undermined somewhat by comments from two independent Trustees yesterday – see http://www.washingtonpost.com/wp-dyn/articles/A59227-2005Mar23.html).

Assume the longstanding practice is to use productivity estimates derived from averages over the prior 4 business cycles (anybody know for sure?). Changing the rules to accommodate short-run developments can get you on a slippery slope, so you keep doing what you've always done. Trustees demographic forecasts suggest labor market growth will be lower than historic average of 1.0%-1.1% in coming years (we use historic averages for productivity, but not labor force growth...). That brings the real growth assumption down to well below the historic norm.

Surely, we don't then just say "a range of opinions exist" without noting that a good bit of that "range" tends toward the low cost estimate. In it's own economic forecasts, both for the budget over 5 years and for the stock market over the infinite horizon, the White House assumes something much better than the Trustees. The CEA, the CBO, the IMF, the OECD are all pretty much in agreement that the next few years are likely to be better than the Trustees admit. The next few years are the ones that matter most.

The problems Brad and Spencer point out still cry out for recognition. The Trustees should say, loudly, that their standard practice for estimating productivity growth is inconsistent with recent results, AND with the assumption of slower labor force growth. Slower labor force growth strongly implies more rapid productivity growth. The labor force growth figures include immigration assumptions that differ rather starkly from recent performance. The Trustees should say, loudly, that the immigration assumption is inconsistent with recent results, AND with the assumption of slower organic growth in the workforce. We have historically supplemented our home-grown labor force through immigration more or less in line with the needs of domestic employers.

Dave's notion that history matters can't be ignored, but neither can economics. One strong candidate to explain at least part of the couple-of-decades slowdown in productivity growth is that the labor force was growing rapidly due to an increase in participation among women. Similar logic argues that a shortage of labor – which is central to the Trustees assumption of slower future output growth – will lead to more rapid productivity growth. We don't need to rely blindly on averages from past cycles when we have strong reasons to suspect they are not a good prediction of future developments.

Dave, the GAO has said the EPA cheated in its mercury studies. We have the evidence of the run-up to the Iraq war. We have the rhetoric of the White House on Social Security, rhetoric that includes words like "broke" and "bankrupt". We have the White House on record saying that most of its tax cuts went to those in the lower and middle class, when you have to slice the baloney incredibly thin to even come close to that conclusion. We know that 3 of the Trustees were appointed by a man who is campaigning for wholesale changes to Social Security. "Not a plot" is far from proven. We should certainly not move on.

[ted]

A political question. I assume these projections use current law which assumes Bush's tax cuts expire on schedule. How much additional productivity growth do the tax cut extension proponents estimate from making the cuts permanent?

[anne]

Nicely explained:

http://www.nytimes.com/2005/03/24/opinion/24thu3.html

About That Number

The Social Security trustees issued their annual report yesterday and said that by one measure, the shortfall in Social Security's finances jumped from $10.4 trillion last year to about $11 trillion this year. Eleven trillion dollars! The trustees, in service to President Bush's alarmist warnings about the need to do something drastic about Social Security, are dishing up some misleading numbers.

It's bad enough that the trustees began some of their calculations with that $10.4 trillion figure. It's arrived at by projecting the system's shortfall over infinity, rather than the usual 75-year time frame - as if the system's finances 10,000 years from now are a legitimate policy concern. Moreover, no less an authority than the American Academy of Actuaries is already on record debunking infinite projections as conveying "little if any useful information about the program's long-range finances" and "likely to mislead anyone lacking technical expertise ... into believing that the program is in far worse financial condition than is actually indicated."

Compounding the subterfuge is that the difference between this year's $11 trillion eyepopper and last year's number - $600 billion - is being used as evidence of a scary deterioration in Social Security's finances. That's just wrong. The two monster numbers are actually the same quantity - different ways of expressing an unchanging level of debt at two different points in time. If you owe someone $1,000 in 10 years, for instance, you could retire the debt now with $500, or next year with $530. Your level of debt doesn't change, just the time point....

[kharris]

Ted,

Tax changes have no effect on the Trustees assumptions regarding productivity. As noted in othere comments, the productivity forecast is a simple-minded average of averages over the past 4 business cycles. At such time as the business cycle we are in ends, assuming it doesn't drag on for a long time at a far lower productivity growth pace than has been the case so far, the Trustees will begin forecasting a somewhat higher pace of productivity growth for future years. A recession could, for simple mechanical reasons, boost the Trustees' productivity forecasts, improving the outlook for the Trust Fund in the process.

And Dave,

The "Krugman is being dishonest" claim, because it has been leveled so often without justification, has a certain partisan pong to it. As he has said on other occassions, and then proven himself right, he doesn't often get the numbers wrong. He's too good with them to make mistakes very often, and has to much at stake to do it just to score points. He knows this stuff pretty well, too. In the end, you may prove correct, but the odds of you being right because Krugman is being dishonest, given the record on questions of his honesty, are low. Jumping to an assertion of dishonesty seems, well, dishonest somehow.

[anne]

These comments are ample and remarkably thoughtful, but KHarris tosses in a thought almost as an aside that we should attend to:

"Slower labor force growth strongly implies more rapid productivity growth." There is every reason to believe we have entered a period of technical advance and application that can be sustained for many years, both because of the nature of information technology advance and profound application possibilities as in health care that and becasue we can use an increasingly select work force in more intrinsicly productive ways.

[Dave]

When I say Krugman is being dishonest, it's because of the way he words his claim. He makes it sound like the Trustees have lowered their assumption about the long-run growth _rate_ in wages. They have done no such thing. They're simply starting from a lower base, which is an historical fact.

I think Krugman is too smart that he confused the two by accident. If our host is going to accuse the Trustees of shading the numbers, with no direct evidence, shouldn't we call out Krugman when it appears that he's trying to confuse the issue, rather than clarify? Just because I happen to agree with Krugman that privatization is a scam doesn't mean I can't criticize him for misleading his readers.

Like I said, I know these numbers very well. And I was really confused by what Krugman wrote; I had to read it 3 or 4 times to figure out what he was saying. What is someone with no technical background, who only reads Krugman's article once, going to think?

[Sam Taylor]

KHarris has put his/her finger on a major problem. I had more faith in the Nixon administration than in this one. At least in the Nixon administration and among the then Republicans in congress there were many honest, capable public servants who were not selected for blind loyalty or ideological purity and were in fact interested in the public good.

I understand that the two remaining "public" trustees (one Republican and one Democrat appointed by Clinton) were not invited to the recent press conference. As reported in today's Washington Post, they have stated publically that the funding status of Social Security has improved over the last 5 years wqhile that of medicare has deteriorated sharply...something most of us know but that does not get headlines given the "spin" of the Administration Trustees with Snow as Chair.

No sane human being with any experience in business or government would do anything at this time about Social Security. The current fiscal and medical care cost problems are in fact much larger and very near term while Social Security funding problems, if any, are over three decades away and fixable with a tweaking of benefits that would still leave future benefits higher than present ones.

I defy anyone to come away with this interpretation from listening to Snow but I sould be curious to see if anyone has a different interpretation of the substance of the Trustees report.

[dogfacegeorge]

Shorter Dave: PK is dishonest for saying something completely true that confused me.

[john c. halasz]

Well, from a leftie perspective, let's be consistent and honest here. The recent run-up in productivity rates has been accompanied by relatively stagnant employment and wages, in contrast to the historical norm for post-recession economic recoveries, and GDP growth has been fueled by large public deficits and miniscule interest rates/massive injection of monetary liquidity, leading to a mortgage refinancing/home equity withdrawal boom that has maintained consumption at the expense of savings and resulted in a ballooning deficit in trade and current accounts. The reasonable expectation then is that economic crunch-time will hit, preferably sooner rather than later, since, in the absence of government responsibility, that is the only way the necessary readjustments would take hold and the longer such imbalances persist and increase, the greater and longer the pain of readjustment. So a recession and stagflation is on the horizon, and, just as the Busheviks can not consistently claim that Social Security is in dire trouble and that stock markets will boom under the same economic assumptions, "our" side can not consistently claim that rosy increases in productivity and GDP rates will continue into the near-to-medium term future,- (and if the productivity rate does continue to rise under recessionary conditions, that would undermine the whole point of considering it as a foundation for S.S.I., since that would mean an even sharper decline in employment and wage rates),- and hold that Bushevik tax and fiscal policies are undermining U.S. economic viability. Of course, the recessionary prospect renders the whole notion of privatizing Social Security all the more absurd, since a) the debt incurred to cover transition costs would only greatly worsen our already dire fiscal condition, and b) Social Security obligations are part of the network of automatic stabilizers against recessionary impacts. I don't know if or how that makes for a viable political argument, but I think it's the honest-to-God truth.

[masaccio]

It seems to me from the comments, especially the last one, that the best alternative doing nothing right now. With the incompetent fiscal management we have, and the grandiose dreams of the ideologues currently running the policy discourse, there is little likelihood of a sensible long-term solution.

That is the current solution of the democrats: letting the republicans thrash around and fail. Lucky for the reality-based community, that is the right plan.

[calmo]

Do nothing. Hope that the WH thrashes itself to death. The Dem strategy? Is there one? Not ours I hope.

Dave's charge of "dishonesty" against PK (who during the election campaign declared that he was no longer interested in playing fair and balanced), gave me pause. So you figure Krugman has an agenda to subvert our otherwise pristine quest for The Truth? Shoot...and just when I disconnected cable. [Just in case kharris's bullet missed.]
I do admire Bruce Webb's energy on this issue and hope that this latest report from the Trustees does not sap that drive. The facts, or atleast those recent productivity numbers, are not going to get in the way of ideology.
Could be the Trustees see it like john does, but I'd say they are just taking directions from Karl.
The irony is that these productivity numbers confirm an economy that is not only "growing stronger" but that it is capable of looking after the SS obligations, (no matter who says its flat broke). The Trustees, as Bruce points out, are paying attention to something else, no?

[Sovereign]

Test

[Sovereign]

Most of the above commentary is preposterous.

Productivity has two facets. First, the monetary aspect, measuring output in money units. Second, the physical. For example, GM could take in 50% more revenue during a 50% inflation. In such a case, there would be a monetary productivity aspect of 50% but a physical productivity aspect of ZERO. These are PLAIN FACTS.

For growth, it is the physical aspect that is meaningful -- NOT THE MONETARY. The commentaries here are essentially meaningless because they ignore any possibility of difference between physical and monetary productivity.

What actually happened in 2004 is greatly shrouded in the fog of inflaton. I hypothesize that in 2004, the USA economy actually had an inflation of about 10%. If that were true, then any increase in GDP must be reduced by the effect of the correct inflation. If GDP rose 4% and inflation was truly 10%, then USA productivity shrank about 5-6% in actuality (physically). Credence to this productivity decline is provided by the horrific trade deficit, demonstrating clearly that USA NEEDS to get its products made abroad and has a declining industrial capacity. Also, amid the horrific level of imports, the USA has had a horrific increase in jobs for menial services: manicurists, dishwashers, burger people, security guards, schleppers, skincare workers, phone hawkers, cellphone vendors, pole dancers, colon irrigators, nannies, gardeners, etc. Besides, we have an enormous weighting of our workforce in jobs that have ZERO productivity increases: cops, firemen, sanitmen, teachers, secretaries, nurses, doctors, retail clerks, waiters, cooks, drivers, etc. It is utterly impossible that in 2004 the USA experienced more physical output and less labor. It is obvious that in our service economy we had MORE LABOR and LESS PHYSICAL OUTPUT (from the dclining industrial base and the growth of imported products.

Was the decline 5% or 6%? Subjectively, I think that's about right. My personal dealings with workers demonstrates a steady decline, accelerating recently. I cite the absurdities involved in calling up for "service" related to medical care, insurance, govt benefits, billing errors, fraudulent charges. I cite the near-impossibility of buying fresh vegetables or uninfected deli at stores run by USA major corps. I cite the horrors involved in dealing with cops.

Calculating ANY future productivity growth for the USA is highly questionable. We recently had a boost in the 90s from Internet and computer advances and new drugs. But those effects are past. Now we face energy worsening, aging, a rise in children's autism, terrorism's drags on resources, and a rise in the proportion of our population from low-IQ parentage.

I contend that inflation is a key to getting it right. The BLS is computing inflation for political purposes. BLS is under Elaine Chao, surely a Bush cheerleader. Ms Chao I would also suspect of orienting our inflation figures to favor a WalMart viewpont and possibly slave-labor imports.

I can provide detailed data showing overall inflation to come out at about 10-12% in 2004. Merely the effect of gasoline on the average family had the effect of a 2% total inflation in 2004. Proof: $15 a week in gas increases is about 3% of average family takehome pay. Add on increases for milk (40%), meat (20%), toothpaste (35%), med insurance (12%), movies (17%), drugs (10%), house or apartment prices (12% to 34%), cable (15%). BLS inflation of 3% in 2004 is subversive propaganda and a criminal fraud against people due govt COLAs.

Productivity changes in the future can be assumed to continue as in 2004 -- NEGATIVE GROWTH!!!!!

[Sovereign]

Most of the above commentary is preposterous.

Productivity has two facets. First, the monetary aspect, measuring output in money units. Second, the physical. For example, GM could take in 50% more revenue during a 50% inflation. In such a case, there would be a monetary productivity aspect of 50% but a physical productivity aspect of ZERO. These are PLAIN FACTS.

For growth, it is the physical aspect that is meaningful -- NOT THE MONETARY. The commentaries here are essentially meaningless because they ignore any possibility of difference between physical and monetary productivity.

What actually happened in 2004 is greatly shrouded in the fog of inflation. I hypothesize that in 2004, the USA economy actually had an inflation of about 10%. If that were true, then any increase in GDP must be reduced by the effect of the correct inflation. If GDP rose 4% and inflation was truly 10%, then USA productivity shrank about 5-6% in actuality (physically). Credence to this productivity decline is provided by the horrific trade deficit, demonstrating clearly that USA NEEDS to get its products made abroad and has a declining industrial capacity. Also, amid the horrific level of imports, the USA has had a horrific increase in jobs for menial services: manicurists, dishwashers, burger people, security guards, schleppers, skincare workers, phone hawkers, cellphone vendors, pole dancers, colon irrigators, nannies, gardeners, etc. Besides, we have an enormous weighting of our workforce in jobs that have ZERO productivity increases: cops, firemen, sanitmen, teachers, secretaries, nurses, doctors, retail clerks, waiters, cooks, drivers, etc. It is utterly impossible that in 2004 the USA experienced more physical output and less labor. It is obvious that in our service economy we had MORE LABOR and LESS PHYSICAL OUTPUT (from the dclining industrial base and the growth of imported products.

Was the decline 5% or 6%? Subjectively, I think that's about right. My personal dealings with workers demonstrates a steady decline, accelerating recently. I cite the absurdities involved in calling up for "service" related to medical care, insurance, govt benefits, billing errors, fraudulent charges. I cite the near-impossibility of buying fresh vegetables or uninfected deli at stores run by USA major corps. I cite the horrors involved in dealing with cops.

Calculating ANY future productivity growth for the USA is highly questionable. We recently had a boost in the 90s from Internet and computer advances and new drugs. But those effects are past. Now we face energy worsening, aging, a rise in children's autism, terrorism's drags on resources, and a rise in the proportion of our population from low-IQ parentage.

I contend that inflation is a key to getting it right. The BLS is computing inflation for political purposes. BLS is under Elaine Chao, surely a Bush cheerleader. Ms Chao I would also suspect of orienting our inflation figures to favor a WalMart viewpont and possibly slave-labor imports.

I can provide detailed data showing overall inflation to come out at about 10-12% in 2004. Merely the effect of gasoline on the average family had the effect of a 2% total inflation in 2004. Proof: $15 a week in gas increases is about 3% of average family takehome pay. Add on increases for milk (40%), meat (20%), toothpaste (35%), med insurance (12%), movies (17%), drugs (10%), house or apartment prices (12% to 34%), cable (15%). BLS inflation of 3% in 2004 is subversive propaganda and a criminal fraud against people due govt COLAs.

Productivity changes in the future can be assumed to continue as in 2004 -- NEGATIVE GROWTH!!!!!

[Sovereign]

Most of the above commentary is preposterous.

Productivity has two facets. First, the monetary aspect, measuring output in money units. Second, the physical. For example, GM could take in 50% more revenue during a 50% inflation. In such a case, there would be a monetary productivity aspect of 50% but a physical productivity aspect of ZERO. These are PLAIN FACTS.

For growth, it is the physical aspect that is meaningful -- NOT THE MONETARY. The commentaries here are essentially meaningless because they ignore any possibility of difference between physical and monetary productivity.

What actually happened in 2004 is greatly shrouded in the fog of inflation. I hypothesize that in 2004, the USA economy actually had an inflation of about 10%. If that were true, then any increase in GDP must be reduced by the effect of the correct inflation. If GDP rose 4% and inflation was truly 10%, then USA productivity shrank about 5-6% in actuality (physically). Credence to this productivity decline is provided by the horrific trade deficit, demonstrating clearly that USA NEEDS to get its products made abroad and has a declining industrial capacity. Also, amid the horrific level of imports, the USA has had a horrific increase in jobs for menial services: manicurists, dishwashers, burger people, security guards, schleppers, skincare workers, phone hawkers, cellphone vendors, pole dancers, colon irrigators, nannies, gardeners, etc. Besides, we have an enormous weighting of our workforce in jobs that have ZERO productivity increases: cops, firemen, sanitmen, teachers, secretaries, nurses, doctors, retail clerks, waiters, cooks, drivers, etc. It is utterly impossible that in 2004 the USA experienced more physical output and less labor. It is obvious that in our service economy we had MORE LABOR and LESS PHYSICAL OUTPUT (from the dclining industrial base and the growth of imported products.

Was the decline 5% or 6%? Subjectively, I think that's about right. My personal dealings with workers demonstrates a steady decline, accelerating recently. I cite the absurdities involved in calling up for "service" related to medical care, insurance, govt benefits, billing errors, fraudulent charges. I cite the near-impossibility of buying fresh vegetables or uninfected deli at stores run by USA major corps. I cite the horrors involved in dealing with cops.

Calculating ANY future productivity growth for the USA is highly questionable. We recently had a boost in the 90s from Internet and computer advances and new drugs. But those effects are past. Now we face energy worsening, aging, a rise in children's autism, terrorism's drags on resources, and a rise in the proportion of our population from low-IQ parentage.

I contend that inflation is a key to getting it right. The BLS is computing inflation for political purposes. BLS is under Elaine Chao, surely a Bush cheerleader. Ms Chao I would also suspect of orienting our inflation figures to favor a WalMart viewpont and possibly slave-labor imports.

I can provide detailed data showing overall inflation to come out at about 10-12% in 2004. Merely the effect of gasoline on the average family had the effect of a 2% total inflation in 2004. Proof: $15 a week in gas increases is about 3% of average family takehome pay. Add on increases for milk (40%), meat (20%), toothpaste (35%), med insurance (12%), movies (17%), drugs (10%), house or apartment prices (12% to 34%), cable (15%). BLS inflation of 3% in 2004 is subversive propaganda and a criminal fraud against people due govt COLAs.

Productivity changes in the future can be assumed to continue as in 2004 -- NEGATIVE GROWTH!!!!!

[Sovereign]

Most of the above commentary is preposterous.

Productivity has two facets. First, the monetary aspect, measuring output in money units. Second, the physical. For example, GM could take in 50% more revenue during a 50% inflation. In such a case, there would be a monetary productivity aspect of 50% but a physical productivity aspect of ZERO. These are PLAIN FACTS.

For growth, it is the physical aspect that is meaningful -- NOT THE MONETARY. The commentaries here are essentially meaningless because they ignore any possibility of difference between physical and monetary productivity.

What actually happened in 2004 is greatly shrouded in the fog of inflation. I hypothesize that in 2004, the USA economy actually had an inflation of about 10%. If that were true, then any increase in GDP must be reduced by the effect of the correct inflation. If GDP rose 4% and inflation was truly 10%, then USA productivity shrank about 5-6% in actuality (physically). Credence to this productivity decline is provided by the horrific trade deficit, demonstrating clearly that USA NEEDS to get its products made abroad and has a declining industrial capacity. Also, amid the horrific level of imports, the USA has had a horrific increase in jobs for menial services: manicurists, dishwashers, burger people, security guards, schleppers, skincare workers, phone hawkers, cellphone vendors, pole dancers, colon irrigators, nannies, gardeners, etc. Besides, we have an enormous weighting of our workforce in jobs that have ZERO productivity increases: cops, firemen, sanitmen, teachers, secretaries, nurses, doctors, retail clerks, waiters, cooks, drivers, etc. It is utterly impossible that in 2004 the USA experienced more physical output and less labor. It is obvious that in our service economy we had MORE LABOR and LESS PHYSICAL OUTPUT (from the dclining industrial base and the growth of imported products.

Was the decline 5% or 6%? Subjectively, I think that's about right. My personal dealings with workers demonstrates a steady decline, accelerating recently. I cite the absurdities involved in calling up for "service" related to medical care, insurance, govt benefits, billing errors, fraudulent charges. I cite the near-impossibility of buying fresh vegetables or uninfected deli at stores run by USA major corps. I cite the horrors involved in dealing with cops.

Calculating ANY future productivity growth for the USA is highly questionable. We recently had a boost in the 90s from Internet and computer advances and new drugs. But those effects are past. Now we face energy worsening, aging, a rise in children's autism, terrorism's drags on resources, and a rise in the proportion of our population from low-IQ parentage.

I contend that inflation is a key to getting it right. The BLS is computing inflation for political purposes. BLS is under Elaine Chao, surely a Bush cheerleader. Ms Chao I would also suspect of orienting our inflation figures to favor a WalMart viewpont and possibly slave-labor imports.

I can provide detailed data showing overall inflation to come out at about 10-12% in 2004. Merely the effect of gasoline on the average family had the effect of a 2% total inflation in 2004. Proof: $15 a week in gas increases is about 3% of average family takehome pay. Add on increases for milk (40%), meat (20%), toothpaste (35%), med insurance (12%), movies (17%), drugs (10%), house or apartment prices (12% to 34%), cable (15%). BLS inflation of 3% in 2004 is subversive propaganda and a criminal fraud against people due govt COLAs.

Productivity changes in the future can be assumed to continue as in 2004 -- NEGATIVE GROWTH!!!!!

[Sovereign]

Most of the above commentary is preposterous.

Productivity has two facets. First, the monetary aspect, measuring output in money units. Second, the physical. For example, GM could take in 50% more revenue during a 50% inflation. In such a case, there would be a monetary productivity aspect of 50% but a physical productivity aspect of ZERO. These are PLAIN FACTS.

For growth, it is the physical aspect that is meaningful -- NOT THE MONETARY. The commentaries here are essentially meaningless because they ignore any possibility of difference between physical and monetary productivity.

What actually happened in 2004 is greatly shrouded in the fog of inflaton. I hypothesize that in 2004, the USA economy actually had an inflation of about 10%. If that were true, then any increase in GDP must be reduced by the effect of the correct inflation. If GDP rose 4% and inflation was truly 10%, then USA productivity shrank about 5-6% in actuality (physically). Credence to this productivity decline is provided by the horrific trade deficit, demonstrating clearly that USA NEEDS to get its products made abroad and has a declining industrial capacity. Also, amid the horrific level of imports, the USA has had a horrific increase in jobs for menial services: manicurists, dishwashers, burger people, security guards, schleppers, skincare workers, phone hawkers, cellphone vendors, pole dancers, colon irrigators, nannies, gardeners, etc. Besides, we have an enormous weighting of our workforce in jobs that have ZERO productivity increases: cops, firemen, sanitmen, teachers, secretaries, nurses, doctors, retail clerks, waiters, cooks, drivers, etc. It is utterly impossible that in 2004 the USA experienced more physical output and less labor. It is obvious that in our service economy we had MORE LABOR and LESS PHYSICAL OUTPUT (from the dclining industrial base and the growth of imported products.

Was the decline 5% or 6%? Subjectively, I think that's about right. My personal dealings with workers demonstrates a steady decline, accelerating recently. I cite the absurdities involved in calling up for "service" related to medical care, insurance, govt benefits, billing errors, fraudulent charges. I cite the near-impossibility of buying fresh vegetables or uninfected deli at stores run by USA major corps. I cite the horrors involved in dealing with cops.

Calculating ANY future productivity growth for the USA is highly questionable. We recently had a boost in the 90s from Internet and computer advances and new drugs. But those effects are past. Now we face energy worsening, aging, a rise in children's autism, terrorism's drags on resources, and a rise in the proportion of our population from low-IQ parentage.

I contend that inflation is a key to getting it right. The BLS is computing inflation for political purposes. BLS is under Elaine Chao, surely a Bush cheerleader. Ms Chao I would also suspect of orienting our inflation figures to favor a WalMart viewpont and possibly slave-labor imports.

I can provide detailed data showing overall inflation to come out at about 10-12% in 2004. Merely the effect of gasoline on the average family had the effect of a 2% total inflation in 2004. Proof: $15 a week in gas increases is about 3% of average family takehome pay. Add on increases for milk (40%), meat (20%), toothpaste (35%), med insurance (12%), movies (17%), drugs (10%), house or apartment prices (12% to 34%), cable (15%). BLS inflation of 3% in 2004 is subversive propaganda and a criminal fraud against people due govt COLAs.

Productivity changes in the future can be assumed to continue as in 2004 -- NEGATIVE GROWTH!!!!!

[Sovereign]

Most of the above commentary is preposterous.

Productivity has two facets. First, the monetary aspect, measuring output in money units. Second, the physical. For example, GM could take in 50% more revenue during a 50% inflation. In such a case, there would be a monetary productivity aspect of 50% but a physical productivity aspect of ZERO. These are PLAIN FACTS.

For growth, it is the physical aspect that is meaningful -- NOT THE MONETARY. The commentaries here are essentially meaningless because they ignore any possibility of difference between physical and monetary productivity.

What actually happened in 2004 is greatly shrouded in the fog of inflaton. I hypothesize that in 2004, the USA economy actually had an inflation of about 10%. If that were true, then any increase in GDP must be reduced by the effect of the correct inflation. If GDP rose 4% and inflation was truly 10%, then USA productivity shrank about 5-6% in actuality (physically). Credence to this productivity decline is provided by the horrific trade deficit, demonstrating clearly that USA NEEDS to get its products made abroad and has a declining industrial capacity. Also, amid the horrific level of imports, the USA has had a horrific increase in jobs for menial services: manicurists, dishwashers, burger people, security guards, schleppers, skincare workers, phone hawkers, cellphone vendors, pole dancers, colon irrigators, nannies, gardeners, etc. Besides, we have an enormous weighting of our workforce in jobs that have ZERO productivity increases: cops, firemen, sanitmen, teachers, secretaries, nurses, doctors, retail clerks, waiters, cooks, drivers, etc. It is utterly impossible that in 2004 the USA experienced more physical output and less labor. It is obvious that in our service economy we had MORE LABOR and LESS PHYSICAL OUTPUT (from the dclining industrial base and the growth of imported products.

Was the decline 5% or 6%? Subjectively, I think that's about right. My personal dealings with workers demonstrates a steady decline, accelerating recently. I cite the absurdities involved in calling up for "service" related to medical care, insurance, govt benefits, billing errors, fraudulent charges. I cite the near-impossibility of buying fresh vegetables or uninfected deli at stores run by USA major corps. I cite the horrors involved in dealing with cops.

Calculating ANY future productivity growth for the USA is highly questionable. We recently had a boost in the 90s from Internet and computer advances and new drugs. But those effects are past. Now we face energy worsening, aging, a rise in children's autism, terrorism's drags on resources, and a rise in the proportion of our population from low-IQ parentage.

I contend that inflation is a key to getting it right. The BLS is computing inflation for political purposes. BLS is under Elaine Chao, surely a Bush cheerleader. Ms Chao I would also suspect of orienting our inflation figures to favor a WalMart viewpont and possibly slave-labor imports.

I can provide detailed data showing overall inflation to come out at about 10-12% in 2004. Merely the effect of gasoline on the average family had the effect of a 2% total inflation in 2004. Proof: $15 a week in gas increases is about 3% of average family takehome pay. Add on increases for milk (40%), meat (20%), toothpaste (35%), med insurance (12%), movies (17%), drugs (10%), house or apartment prices (12% to 34%), cable (15%). BLS inflation of 3% in 2004 is subversive propaganda and a criminal fraud against people due govt COLAs.

Productivity changes in the future can be assumed to continue as in 2004 -- NEGATIVE GROWTH!!!!!