For week ended 1/4/2025
After the holiday respite, welcome back to the 2025 edition of Monday Morning Musings. Without further delay, let's get briefed: there are two elements to economic growth - an increase in labor (more workers) and productivity. The productivity factor is harder to quantify but boils down to the total output of the economy divided by hours worked. And on that note, I am pleased to report U.S. productivity rose 2% in the third quarter relative to the same period a year earlier. This marked the fifth quarter straight with a 2% or higher year-over-year gain. For reference, in the half-decade prior to the pandemic, this only occurred twice.
Why the significant productivity increase? Though the reasons are varied, the basic equation equates to companies and individuals learning new ways of doing things and adopting innovative technologies. Mass immigration has also provided other workers the opportunity to move up the ladder into more productive positions.
While it’s too early to talk about 2025 market performance, last year was all about domestic stocks as bonds struggled. Happy new year and may we all be more productive in 2025.
Interesting data point of the week.
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