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Speaker 1: Broadcasting live to New York, Bloomberg eleventh, Rio to Washington,

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Speaker 1: d C, Bloomberg one to Boston, Bloomberg twelve one to

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Speaker 1: San Francisco, Bloomberg nine sixty to the Country Series Exam

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Speaker 1: General one ninety and around the glow the Bloomberg Radio Open,

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Speaker 1: SAP and Boomberg dot Com. This is Bloomberg Surveillance. Good morning.

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Speaker 1: I'm Karen Moscow along with Tom Keene and Michael McKee,

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Speaker 1: and the opening Vale is brought to you by s

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Speaker 1: C I Imagine, a global operating platform designed to deliver

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Speaker 1: a differentiated and technologically rich investor experience. Find out how

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Speaker 1: se I can help you succeed at sci C dot com.

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Speaker 1: Slash Imagine. Songs are higher at the open. The SNP

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Speaker 1: five hundred up six tenths per cent or twelve points

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Speaker 1: to two thousand two. The Dow Jones Industrial average is

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Speaker 1: up half a percent or seven seventy nine points to

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Speaker 1: seventeen thousand, seventy four. Then as to accept one percent

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Speaker 1: or forty eight points to forty seven ten tenure Treasury

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Speaker 1: little change yield at one point nine three percent yield

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Speaker 1: at the two year point nine four percent ninemex screwed

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Speaker 1: oil of two point three percent or eighty six cents

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Speaker 1: to thirty eight seventy of Barrel Comic School there is

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Speaker 1: down four tenths per cent or five dollar seventy cents

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Speaker 1: to twelve sixty the euro at allar eleven nineteen and

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Speaker 1: the yen one thirteen point six four. Tom and Mike

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Speaker 1: Caramesco thank you very much. Well, those of you who

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Speaker 1: listen to this program regular leak and you know who

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Speaker 1: you are. Uh No that we have spent a lot

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Speaker 1: of time talking about productivity and why it is so

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Speaker 1: low and what the consequences for the economy and for

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Speaker 1: standards of living are. One of the questions that continually

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Speaker 1: comes up is are we mismeasuring productivity because we're in

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Speaker 1: an age of rapidly changing technology. Chad Severson is a

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Speaker 1: professor at the University of Chicago's Booth School of Business,

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Speaker 1: and he's done an unusual thing. He's looked at the

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Speaker 1: data and you find owns Chicago and do that in

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Speaker 1: a new in a new paper. The data do not

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Speaker 1: support the idea that we are mismeasuring productivity. Yes, that

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Speaker 1: seems to be the case in several different directions. Well,

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Speaker 1: tell us about what you find. So I looked at

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Speaker 1: a few things. Um first is what you see across

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Speaker 1: several a couple dozen countries is the pattern is the same.

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Speaker 1: So there was a productivity slow down that happened right

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Speaker 1: around two thousand four, and uh, there is no relationship

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Speaker 1: between the size of the productivity slow down in a

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Speaker 1: country and how I T intensive. That country's economy is

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Speaker 1: weather measured on the production side, which is, you know

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Speaker 1: what fraction of the economy is accounted for by production

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Speaker 1: of I T related goods or on the consumption side,

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Speaker 1: so it measured by for example, broadband penetration. You you

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Speaker 1: just don't see a relationship between technology and the size

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Speaker 1: of the productivity slowdown, which is exactly what you would

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Speaker 1: expect if if mismeasurement is causing the the productivity slowed,

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Speaker 1: the measured productivity slowdown in that case, And then you

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Speaker 1: can look at things a couple other ways too. If

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Speaker 1: you people have tried to go measure UH in different settings,

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Speaker 1: you know how much uh, the how much people view

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Speaker 1: the benefits from from information technologies, things like basically trying

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Speaker 1: to value what Facebook and Google and all that are

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Speaker 1: worth to people. And even if you take the high

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Speaker 1: end of those numbers, you can't explain anywhere near the

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Speaker 1: amount output that's been lost by the productivity slow. Mean,

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Speaker 1: that's that's a useful thing to remember here. What we're

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Speaker 1: trying to explain is about three trillion dollars a year

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Speaker 1: of missing output. So if you're gonna say, look, we're

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Speaker 1: just productivity slowed down only because we're mismeasuring it, that's

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Speaker 1: kind of the target you should have in mind. You

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Speaker 1: you your work is first of all, we're thrilled to

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Speaker 1: have you on and and the the again looking at

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Speaker 1: the data is to be kind of helpful. What's so

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Speaker 1: powerful about your work? Professor? As you go back, I mean,

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Speaker 1: Krasner was Chicago in seven when John Kendrick did his

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Speaker 1: study on electrification, and the bottom line is it's just

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Speaker 1: history repeating itself, right, that's right. So if you look

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Speaker 1: at what happened during the electrification the portable power, you

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Speaker 1: see a strikingly similar pattern and productivity growth. There was

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Speaker 1: a slow period of about a quarter century. People were saying, well,

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Speaker 1: we have these great new technologies. Whereas the productivity then

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Speaker 1: it's sped up, and that slowed down again. Now we're

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Speaker 1: waiting for that next speed up that has not happened yet.

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Speaker 1: We're in that's we're in the bebending slowdown since two

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Speaker 1: thousand and four. This is similar to what happened with

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Speaker 1: the adoption of electricity. But eventually we saw electricity really

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Speaker 1: contribute to productivity games. That's true, there was a second

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Speaker 1: wave of productivity growth with electrification. Uh. We're waiting for

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Speaker 1: that with with I T and the technologies we have

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Speaker 1: to day. But as hopeful as some folks are that

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Speaker 1: it's happened and we're just not measuring it again, like

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Speaker 1: I said, it's just when you take a closer look

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Speaker 1: of the data does not seem to be there yet.

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Speaker 1: We've had a lot of discussions on this. Of course,

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Speaker 1: it is the national question and professor, if you're just

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Speaker 1: joining us, Uh, folks, this is an important discussion on

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Speaker 1: productivity with all with Mario drog yesterday. Chad Sibson, a

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Speaker 1: Chicago booths with important research um capital dynamics, labor dynamics.

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Speaker 1: Dominique Constant at Deutsche Bank is adamant. The investment is

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Speaker 1: actually pretty good. It's just there's a wall labor coming

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Speaker 1: in creating a lot of inefficiencies. Give us the dynamic

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Speaker 1: right now, away from the I T analysis of what

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Speaker 1: capital and what labor are doing, well, it's certainly true

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Speaker 1: that you know, if you invest more and for a

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Speaker 1: given sized labor force, you should expect labor productivity to

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Speaker 1: go up. And by a lot of metrics, Uh, capital

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Speaker 1: investment seems to have been lagging for several years. We

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Speaker 1: seem to be behind on on housing investment for perhaps

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Speaker 1: obvious reasons. On public investment, there's just been maybe a

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Speaker 1: lack of putting capital into place. Now we've got new

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Speaker 1: workers coming into the economy or back into the labor force,

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Speaker 1: all those things are going to tend to lean against

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Speaker 1: productivity in the short run at least. But then again,

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Speaker 1: you know this slowdown started even before the crisis, So

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Speaker 1: we're talking about not just short run trends. We're talking

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Speaker 1: about longer run trends here that are operating at the

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Speaker 1: same time. I look at productivity then, and you know,

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Speaker 1: in every textbook, and this is through Chicago or any

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Speaker 1: other school, there's this thing called total total factor productivity.

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Speaker 1: It's basically, folks, the noise off the right hand side

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Speaker 1: of the equation. How how are we doing with our

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Speaker 1: technological progress? How do you fold that in to this

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Speaker 1: equal comparison of electrification, and I t yeah, that's a

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Speaker 1: great question. So basically, labor productivity comes from two things.

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Speaker 1: One is capital investment, which we just talked about in

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Speaker 1: The second thing is total factor productivity. Both of those

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Speaker 1: have been slow during this labor productivity slowdown. So we

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Speaker 1: were just mentioning that capital investment spent on the slow side.

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Speaker 1: But it's not just that total factor productivity, which is

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Speaker 1: kind of you know, for people to imagine what's going on.

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Speaker 1: It's it's technological progress, for lack of a better term,

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Speaker 1: you know, the more output you're going to get from

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Speaker 1: the same amount of inputs. That is also slowed with

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Speaker 1: similar timing to the labor productivity slowdown. So it seems

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Speaker 1: that both of these things seem to be driving the slowdown.

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Speaker 1: It was the antion of total factor productivity in the

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Speaker 1: in the late nineties that got it's the last productivity

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Speaker 1: boost from thousand and four. The same thing happened with electrification.

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Speaker 1: A lot of that was total factor productivity as well.

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Speaker 1: Chad Saverson has been us from the Chicago Boost. Look

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Speaker 1: at continue our conversation productivity and uh, whether or not

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Speaker 1: our bosses are really measuring what Tom and I do effectively? Well,

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Speaker 1: we know we're non productive. I mean, Michael Barr is

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Speaker 1: the only reason productivity advances at Bloomberg's surveillance. I'm going

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Speaker 1: to keep the illusion going, keep illusions very good. That's

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Speaker 1: very British of you, Michael Barr with the money illusion.

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Speaker 1: Segue segui there into product activity. Seriously, folks, productivity, what

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Speaker 1: they heat, whether we heard it from Chairman Greenspan or

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Speaker 1: Chad's iverson, they heat of mystery. An analysis right now

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Speaker 1: on this strange economic soup is like I've never seen that.

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Speaker 1: The mystery of where are we with the nation's efficiency

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Speaker 1: is really Rutton Center. The Dow likes to be efficient

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Speaker 1: right now. Up a hundred and sixty points seventeen thousand,

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Speaker 1: one hundred and fifty three on the Dow. The vix

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Speaker 1: in a full stick seventeen point zero nine. Good news

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Speaker 1: risk on for the markets. Now, let's check in with

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Speaker 1: Michael Barr. Got the latest world initial hidlers, Mike Tom,

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Speaker 1: thank you very much. Ben Carson made it official. The

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Speaker 1: former Republican presidential candidate announced his support this morning for

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Speaker 1: Donald Trump. They're two different Donald Trumps. There's the one

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Speaker 1: you see on the stage, and there's the one who's

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Speaker 1: very cerebral, sits there and considers things very carefully. Carson

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Speaker 1: says he has buried the hatchet with Trump. Funeral services

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Speaker 1: will begin later today for former First Lady Nancy Reagan.

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Speaker 1: Four of the five living First Ladies will attend the

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Speaker 1: funeral at the Reagan Presidential Library and Seni Valley, California.

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Speaker 1: About a thousand guests seven invited, including former President George W. Bush.

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Speaker 1: It would be the first New Jersey transit strike in

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Speaker 1: three decades if they do not come to an agreement soon.

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Speaker 1: Union workers were one of the busiest commuter railroads have

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Speaker 1: set an early Sunday deadline a strike with strand tens

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Speaker 1: of thousands of commuters in and out of Manhattan, New York,

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Speaker 1: and some traffic experts say a work stoppage could cause

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Speaker 1: twenty mile backups at the Lincoln and Holland Tunnels. Global

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Speaker 1: News twenty four hours a day, powered by hours journalists

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Speaker 1: more than a hundred fifty news bureaus from around the world.

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Speaker 1: I'm like, Michael Bye, that's so important. We gotta sum

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Speaker 1: that up. Likelihood Monday morning, Oh, it's gonna be mad

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Speaker 1: because the New Jersey transit officials is saying they can

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Speaker 1: only get four out of ten transit people who take

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Speaker 1: the railroariors to get in and out on the bus.

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Speaker 1: I've cut to the chase. Starting Sunday, Bloomberg Radio for

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Speaker 1: all of you in Bloomberg eleven THREEO, New York and

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Speaker 1: for that matter, around the nation that would like to

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Speaker 1: follow us an important UH moment for New Jersey. Look

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Speaker 1: for that Monday morning Bloomberg Surveillance Bloomberg surnounced brought to

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