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Registered Investment Adviser Caleb Lawrence

Volatile trade sent the major averages into the final hour with small losses on generally disappointing but not overly significant data.

On a revised basis productivity was unchanged in the 1st quarter, while unit labor costs climbed 2.2%. This follows a sharp decline in revised unit labor costs for the 4th quarter of last year. That said gains in compensation costs seem to be moderating. On a year-ago basis, unit labor costs were up 1.1% in the first quarter while productivity increased 1.2%.

The Institute for Supply Manufacturing non-manufacturing or services index slipped .6-points in May to 56.9 on notable declines in new orders and trade data. Prices paid fell 8.4 points to 49.2 signaling falling prices.

Factory orders dropped .2% in April, the first decline in 5-months. On a large decline in durable goods orders.

Recent data has shown that in the 10-years preceding the great depression of 1929 average annual economic growth as measured by GDP or Gross Domestic Product was a paltry 1.3% per year during the 30’s. Fast forward to the present and in the 10-years from 2007- 2016 GDP growth averaged just 1.33%. Once again history may not repeat but it often rhymes. Another item noted was the epic level of deficit spending, funded by debt of course, that was required to produce the 1.33% annualized economic growth achieved, or about 10-trillion Dollars over the period in question. Not covered by the report was the huge decrease in the labor force participation rate that translates into nearly 100 million folks no longer employed or counted as unemployed an item that features prominently in the magic of a 4.3% unemployment rate in the post crisis period.

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