Not That Storm Again

Posted by: Michael Mandel on May 08

Writing in the NYT today (5/8/05), Daniel Gross makes the case for “The Perfect Storm That Could Drown the Economy.” He worries about “the many obvious and worrisome portents,” including “record trade and current accounts.” He concludes, ominously,

It sure sounds alarming. But as the clouds gather and the wind stiffens, we sail onward, with no apparent adjustment in course, full steam ahead.

Sigh. Mr. Gross has managed to write a story about the future of the U.S. economy without once mentioning the word ‘productivity.’ And to quote another NYT writer, Paul Krugman: “Productivity isn’t everything, but in the long-run it is almost everything.”

And guess what? According to numbers released just last Thursday, productivity is growing at a pretty good 2.6% rate. That marks ten years of solid—or better—productivity gains. I’d take good productivity growth and a trade deficit over stagnant productivity growth and a trade surplus, any day of the week.

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Reader Comments

Jack K. Miller

May 9, 2005 02:58 PM

Here! Here! I am glad to have found your comments. Americans and Chinese have gained great wealth through our willingess to trade. Ironically one of the prime reasons is that productivity has been so strong in China. The Chinese have lost a lot of manufacturing jobs now that they have entered the industrialized world!

Tax revenues in the US are coming in at extraordinary levels. The fiscal deficit is large but we are growing out of it. Should one look at the growth in our exports of high value goods, one must conclude that the current account deficit is also under control. Thank you for the positive post.

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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