Yesterday, I mentioned Bill Cara's long-term optimism for equities based on his view that productivity will grow faster than inflation. His take on the Labor Department's report on productivity yesterday:
This morning, the U.S. Labor Department reported that workplace productivity for 1Q05 rose at an annual rate of 2.6 pct, which is faster than the growth in PPI/CPI. Moreover, first quarter unit labor costs -- which is a key driver of inflation -- increased at a 2.2 pct annual rate, and compensation grew at 2.4 pct annually (after inflation). So, again, the big picture remains positive for the economy in terms of the growth in real wealth....
MarketWatch, in reporting this news, quoted Joshua Shapiro, chief economist for MFR Inc, as saying: "The harshest cost-cutting by the corporate sector has run its course." Tell that to IBM, which announced yesterday that it will cut 10,000 to 13,000 jobs worldwide.
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