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Speaker 1: Three oh Glombo Business News twenty four hours a day

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Speaker 1: at Bloomberg dot com, the Radio plus Mobile Act and

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Speaker 1: on your radio. This is a Bloomberg Business Flash from

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Speaker 1: Bloomberg World Headquarters. I'm Katherine Cowdery Bloomberg Taking Stock is

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Speaker 1: brought to you by one eight hundred flowers dot com.

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Speaker 1: eleven three oh. We check in markets every fifteen minutes

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Speaker 1: through out their trading day. Now over the First Word

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Speaker 1: Breaking News Desk for today's afternoon call with Bill Maloney. Bill,

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Speaker 1: Good afternoon, Katherine. Stocks are under pressure, with the Dow

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Speaker 1: currently lower by a hundred and forty nine points. Says

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Speaker 1: that he's dropped twenty and NAZAC falls fifty. At one point,

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Speaker 1: the Dow was lower by two hundred and twenty points.

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Speaker 1: The small cap six hundred is down ten points, and

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Speaker 1: the ten yeel falls to one point seven nine percent

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Speaker 1: nine out of tennes s B sectors are lower, led

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Speaker 1: by losses and energy, materials and the financials. Small gains

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Speaker 1: in healthcare down transports fall nineties six and as a

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Speaker 1: bow text decline thirty three and the vix is higher

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Speaker 1: by seven per cent. Doll Leators to the downside included

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Speaker 1: JP Morgan, Cisco and United Technologies, Fiser and Apple led

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Speaker 1: to the upside. Some of the names pointing after the

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Speaker 1: belt tonight include A Lumina, Devin Energy, Zillo, and Agrium.

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Speaker 1: Live from the first breaking news Descomb, Bill Maloney, Katherine,

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Speaker 1: thank you Bill, and to hear live breaking news over

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Speaker 1: your Bloomberg type s q U a K on your

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Speaker 1: terminal oil tumble blow are forty four dollars a barrel

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Speaker 1: today ahead of a government report that's expected to show

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Speaker 1: an increase in crude supplies last week, West Texasider Media

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Speaker 1: crude oil is down a dollar for a barrel, trading

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Speaker 1: at forty seventy four spot, Gold down seven dollars fifty

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Speaker 1: cents ounce, and that tenure treasury up seconds with the

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Speaker 1: yield of one point seven nine percent. And that's a

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Speaker 1: Bloomberg business flash. This is taking stock with Kathleen Hayes

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Speaker 1: and Grim Box on Bloomberg Radio. I'm Kathleen Hayes in

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Speaker 1: San Francisco or Bloomberg News of Bureau. Welcome you another

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Speaker 1: guest from the Federal Reserve Bank of San Francisco to

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Speaker 1: talk to Pim Fox, my co host, and I about

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Speaker 1: the labor market. John Fernald is Senior Research Advisor at

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Speaker 1: the San Francisco FED and he's here to talk to

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Speaker 1: us about a very important topic, which is productivity. Productivity

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Speaker 1: of workers. John is a very important determinant of growth

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Speaker 1: in the economy, really helps determine g d P, but

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Speaker 1: it has slowed a lot. Why Hi, thanks, very very

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Speaker 1: pleased to be here. Uh. Well, I would highlight not

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Speaker 1: just the weakness in the past five years, but really

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Speaker 1: the weakness of the past dozen or so years in productivity.

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Speaker 1: The productivity was slow leading into the Great Recession. So

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Speaker 1: I don't think the weakness is just the Great Recession

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Speaker 1: or it's aftermath. I think it has much more to

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Speaker 1: do with the new normal. We all wanted the new

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Speaker 1: normal to be the fast base of productivity growth we

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Speaker 1: saw in the mid nineties to the mid two thousands,

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Speaker 1: where information technology was really transforming a lot of what

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Speaker 1: businesses we're doing throughout the economy. What we've seen in

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Speaker 1: the past dozen years is that, uh, there's still lots

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Speaker 1: of transformative things happening in terms of information technology, in

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Speaker 1: terms of mobile and cloud can computing and artificial intelligence,

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Speaker 1: but it hasn't been spilling over in the same way

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Speaker 1: two businesses throughout the economy elsewhere outside of the production

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Speaker 1: of information technology. John, So, so, how do you measure productivity?

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Speaker 1: And is where has all the productivity gone in the

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Speaker 1: United States? A great question. So, of course productive by

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Speaker 1: the basic thing I mean by productivity is output per

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Speaker 1: hour work or GDP per hour work, which is at

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Speaker 1: some level it's it's a narrow part of the things

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Speaker 1: we all care about. We care about things beyond just

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Speaker 1: market sector g d P UH, but it's the main

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Speaker 1: locus of innovation in the eco onomy. And so you've

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Speaker 1: output per hour can go up because we have better skills,

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Speaker 1: people are more educated, and go up because we give

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Speaker 1: people more tools to work with, you know, more equipment

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Speaker 1: and software and structures and UH research development, or because

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Speaker 1: we innovate broadly. So, but one of the things you

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Speaker 1: saw in the mid nineties on really coming before that

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Speaker 1: is things like distribution, which was just transformed by the

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Speaker 1: fact that UH businesses like Walmart figured out lots of

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Speaker 1: great ways to reorganize the distribution sector. You know how

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Speaker 1: they got products into their stores and into the hands

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Speaker 1: of consumers. They could do it much more cheaply, much

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Speaker 1: more efficiently. Well, the other thing you saw is that

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Speaker 1: low efficiency, uh, low productivity. Your mom and pops dropped out,

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Speaker 1: I mean they were they were forced out of business.

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Speaker 1: So you've got a reallocation towards those high productivity firms. Well,

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Speaker 1: that process naturally comes to an end. I mean you

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Speaker 1: get at a one time improvement and you put a

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Speaker 1: new place, a new thing, the low productivity firms center

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Speaker 1: exit and you're left with kind of ongoing incremental gains. Well,

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Speaker 1: so it's great to have high productivity, and it's great

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Speaker 1: to have more efficiency, but it seems to me we

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Speaker 1: are just we're just limitating more and more jobs without

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Speaker 1: creating because we can't create the jobs. This happens organically, right,

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Speaker 1: I mean inventions and new technologies, but so many technologies

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Speaker 1: now are labor saving and labor limiting. Are we gonna

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Speaker 1: have like a two tier society where some people have

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Speaker 1: the touch jobs and they make a lot of money

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Speaker 1: and everybody else grows baby carrots? You know, because that's

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Speaker 1: all it's gonna be left to do is really pursue

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Speaker 1: the new food trends or something. I'm being a little

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Speaker 1: bit extreme, but I think a lot of people are worried.

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Speaker 1: That's right. So one thing Mary mentioned on on her

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Speaker 1: segment is that this has been going on for two

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Speaker 1: hundred years. Two hundred years ago, people were worried that

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Speaker 1: automation was going to cost jobs. What it's done is

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Speaker 1: UH often cost jobs in the areas that really produced

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Speaker 1: the innovation UH, but created new jobs elsewhere, because for

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Speaker 1: one thing, it's generating income and real purchasing power and

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Speaker 1: increases in real wages that then people spend elsewhere. So

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Speaker 1: it is UH in the long term, do not cost jobs.

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Speaker 1: In the long term, it's it's we found new places.

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Speaker 1: I know there's a lot of concerns that maybe this

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Speaker 1: time is different. I think it's still hard to say

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Speaker 1: on that front. What I will say is, UH, even

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Speaker 1: if your productivity is still just sort of ink growing incrementally, UH,

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Speaker 1: it's very hard to predict where the job gains will

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Speaker 1: come UH and which jobs are going to be eliminated.

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Speaker 1: And so there's a lot of need for flexibility in

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Speaker 1: the economy, both the benefit from ideas and to ensure

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Speaker 1: that people can take advantage of the opportunities they have

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Speaker 1: just quickly, John, intangible investments in things such as organizational capital,

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Speaker 1: they complementary to things like you know, information and communication technology. Absolutely,

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Speaker 1: that's something we've really scene as you get information technology

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Speaker 1: where the processing speed gets faster, communications gets easier when

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Speaker 1: you have data storage gets better, and businesses then have

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Speaker 1: to figure out, well, how do we benefit from this,

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Speaker 1: how do we take advantage of this to change how

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Speaker 1: we do our business. So we're you know, we're obviously

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Speaker 1: we're I mentioned I mentioned retail where I'm sort of

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Speaker 1: focused on your brick and mortar change, but of course

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Speaker 1: a lot steadily things move online and businesses find ways

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Speaker 1: to think about the complimentarities between online and brick and mortar.

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Speaker 1: Thank you very much, John Fernald. He is a senior

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Speaker 1: research advisor at the San Francisco Federal Or Reserve. You're

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Speaker 1: listening to Taking Stock on Bloomberg Radio Bloomberg. Taking Stock

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