IBM chief economist Philip Swan says the U.S. recession is over and that our economy will reap a "productivity dividend" that, if sustained, could lead to "an awful lot of upswing in the economy."In two appearances last week before statewide technology organizations in Colorado and Utah, Swan cited the following as evidence for his claim that the U.S. has climbed out of its recession, according to the Colorado-based RockyRadar.com site: *the bear market on Wall Street ended March 9, and historical trends show that recessions end four months after the bear market winds down *banks have resumed lending to one another *manufacturing companies have sold through the $300 billion inventory backlog that had built up during the recession, and so are ready to step up production *the Purchasing Managers Index continues to climb *July marked the first month with an increase in the hours worked per employee per year, which Swan interprets as a sign that new hires will be needed soon.
But the real key to a turnaround, Swan said, will be worker productivity, which he said is strongly influenced by technology investments. (No huge surprise there-were we really expecting the chief economist from IBM to say that IT isn't a factor in productivity growth??)
And the great news on that all-important front is the productivity surge reported for the last quarter by the Labor Dept. In recent years, Swan said, U.S. productivity has grown about 2.5% per year. But in the April-May-June quarter of this year, U.S. productivity surged 6.6%.
"If we're able to sustain that type of productivity gain, that means we can have an awful lot of upswing in the economy," Swan was quoted as saying in a Salt Lake Tribune article.
One of the threats to such an upswing, however, is the federal government's projections of deficits approaching an unprecedented $10 trillion. With such deficits, the government will be forced to borrow staggering amounts of money to meet its obligations, leaving precious little credit for consumers and businesses. Swan evoked a colorful-but scary-image of how that battle for precious resources would play out:
"We'll be competing, and we know who will win if those funds are limited," he said. "The government can pay anything it has to. That's how you get to be government."
With a scenario like that looming, we members of the worker class had better get busy and ensure that Swan's projected "productivity dividend" is as big as possible.