Hey everyone meet kevin here. The market is a complete disaster, the nasdaq's basically down five percent. The dow is down over a thousand points, everything's going nuts. Why well a you've got europe which we talked about this morning.

The bank of england recessionary fears. The recession will come all this kind of nonsense right, but in the united states you've got this productivity report, and so even though i reported on that this morning, i went through the details because i'm like wait a minute. This just doesn't make sense. Why are we so concerned about this stupid productivity report in the united states, and then i got to thinking to myself a little bit wait a minute.

Maybe we shouldn't be. Maybe i'm missing something but take a look at this okay. This is very interesting, and no, it's not the fact that there's an expiring coupon code for may 16th for the programs of building your wealth linked down below and having that long-term perspective, like what you're about to learn, take a look at this okay, so we're gon Na draw this together so wait a frickin minute here, a productivity report. Much like a gdp report is a quarterly report and what's fascinating about this quarterly report is that january february and march together, minus the holidays that we had had 62 working days, but something that the report spent absolutely zero time talking about was the fact that a Lot of people took one to two weeks off in january and early february because of omicron.

Now we know omicron, oh i roll or whatever, and some people like. Oh, i could get my work done anyway, but wait a second if you're producing, like, like, let's say, you're a salesperson, you're knocking on doors or you're, creating something at a business like working on uh. You know, selling inventory or whatever, because you're a wholesale managing distributor. A distributor or whatever it's hard to catch up on that work like you, fall behind and stuff just falls out of the quarter.

Everything kind of gets kicked down the road, so productivity can go down when people miss work. You know some people think i i'll catch up on catch up. We generally don't especially when you're out a week or two like it's one thing, if you're out a day, but if you're out a week or two that's a lot, let's just say the average worker. When we don't know this, they don't give us these stats.

Of course, but let's say the average worker was out five days folks, that is an eight percent decline in productivity simply because the average worker was out five working days in q1, and so what's really fascinating about this report. Uh - and we talked about this this morning in the course member live stream and when we brainstorm on this together, in addition to our peg spreadsheet, that we're working on, but this was really fascinating because we're brainstorming about this when i first got this report and heard This is the worst decline in productivity since 1947. I'm like oh my gosh. This is sending a signal that employees just suck that they're not that they're not working hard right now right, but then i'm like what happened in q1, ah well, duh, omicron and supply chain issues.

Now, fascinatingly, though i did ask myself, is this supply related and down here we see manufacturing sector label. Labor productivity in the united states was actually up 0.7 percent, so it wasn't manufacturing that hurt us. It was non-farm business that basically represents 75 of the commerce that we transact in the united states. Now it doesn't track the supply chain issues from china.

So, for example, if we have supply chain issues from china that could show up in non-farm business, because people aren't able to let's say, sell wholesale goods because they're stuck in china, so the supply chain issues will represent in non-farm business. Even though our manufacturing sector grew in productivity, so now we get a couple things like we want to put this together, so we have omicron. Then we have china and then we have the highest cpi. Pretty much.

We're expecting, hopefully, is a peak in march uh, and this high cpi in march affects productivity. Take a look at this okay. This is pretty ridiculous. You jump over here.

They say this is a this is when we look at this uh, a real output right here. Labor productivity, negative 7.7 percent right and then the per unit cost of labor went up over 11. Well, what is productivity productivity is the relationship between real output and the time involved to make that real output, but real output is actually an inflation adjusted number. So that means you're going to get a high number in a high number of basically cost, which means lower productivity in q1 because of inflation.

So personally, i hate to say it, but i think that when we combine the productivity drop of omicron, the supply chain drop of china and already very high prices, which are then reflected in a decline of real output, what do you get? Well, you get a recipe for a massive drop in productivity, even if workers are actually working harder and better, and so that's why i think this report is not necessarily a sign that things are getting worse. It's a dated report. It's a lagging indicator. If inflation peaked in march guess what happens potentially in q2 productivity skyrockets, it's just my thought: i'm not trying to be like the perma bull here or whatever.

But when i looked at the details of this report, let's just say i got a lot less nervous. It doesn't change the fact the market's selling off today, but that's the way the market works. All right folks see you in the next one bye.