row!...row!...row!...

(* Why? P/E ratios are still rather high. There's still room for prices to fall another 25% or so, before they fall back to the historical averages. *)

I thot they were already at their historical average of about 15 to 17. Does anybody know of any websites with long-term graphs or data on such?

I do remember a graph back in 1999 where the author predicted gloom and doom based on p/e ratios. I should have kept that. The original may be worth something on ebay these days.

(* However, I think growth is going to be really good, because labor productivity is growing like gangbusters. *)

Productivity is such a fuzzy concept that I am not really convinced such numbers mean much. Measuring quality or market desirability of something is tough to do over the long run. How do you measure if today's movies are better than those of the 1980's? Or fashion today better than yesteryear's?

The US economy depends less and less on making "things", so productivity in the sense of widgets per hour is kind of like nailing jello to a cloud (to barrow an old OO-evidence-is-vauge dig.)

Measuring rope and soap productivity change is rather simple. Measuring things like media content and service quality is really a sticky art.

Besides, the increased productivity is perhaps because they fired people or pay them less, and the remaining ones work harder to avoid getting fired also. IOW, they are rowing to a faster drum beat.

I thot they were already at their historical average of about 15 to 17. Does anybody know of any websites with long-term graphs or data on such? I do remember a graph back in 1999 where the author predicted gloom and doom based on p/e ratios. I should have kept that. The original may be worth something on ebay these days.

The S&P 500 has an average p/e of around 25. My old boss -- Robert Shiller -- has been predicting doom for the stock market since I knew him (1997 or so).

Productivity is such a fuzzy concept that I am not really convinced such numbers mean much. Measuring quality or market desirability of something is tough to do over the long run. How do you measure if today's movies are better than those of the 1980's? Or fashion today better than yesteryear's? The US economy depends less and less on making "things", so productivity in the sense of widgets per hour is kind of like nailing jello to a cloud (to barrow an old OO-evidence-is-vauge dig.) Measuring rope and soap productivity change is rather simple. Measuring things like media content and service quality is really a sticky art.

Actually, even measuring productivity increases for soap or rope is hard: how do you account for changes in cleaning power or rope strength? Economists try to avoid this problem by measuring productivity indirectly. What they do is look at the total change in the value of the output, and then calculate how much of the output was due shifting capital and labor inputs. The bit that's left over is due to changes in productivity. So an economist's definition of productivity includes improved work conditions, more efficient management, new technology and everything else that isn't directly measured as capital or labor. Since it's measured indirectly, it fluctuates a lot from quarter to quarter, but it's very important because it's "free money" -- it increases the maximum rate the economy can grow without running into the capital or labor shortages that will spark inflation.

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