Boring, but very important

Productivity, or output per man hour, is an important measure of profitability (click on graph to enlarge). But there is more to it.

When the economy is in a recession, productivity, which measures our efficiency in producing goods, rises. Why? Business strives to be more efficient to protect margins. This is an important condition for the economy to move out of a recession. See, for instance, what happened during the 2002 recession.

The problem with this business cycle is that productivity is declining, suggesting that profitability is still under downward pressure.

The economy will recover after steady improvement in productivity.

Question. Does the stimulus package improve our productivity?

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD