ENJOY THE SURGE IN PRODUCTIVITY--IT MAY NOT LAST
Although business productivity surged by 3.2% last year, its strongest showing in two decades, economist Michael Moran of Daiwa Securities America Inc. notes that it's still far too early to conclude that this gain represents a long-term improvement in the economy's performance. "Productivity has a strong cyclical component and typically grows very rapidly in the early stages of an expansion," he says.
In fact, Moran calculates that productivity growth during the first seven quarters of the current upswing just about matches the average of the prior six recoveries. The robust expansion that began in late 1982, he cautions, also fueled speculation that the use of new technologies was pushing productivity onto a higher growth path.GENE KORETZ