Mark Moss shows how a productivity boom failed to lower prices for consumers. While the S&P 500 tripled over six years and inflation stayed flat at 2-3% annually, the gains went to asset owners, not wage earners buying goods.
On the left-hand side, we have consumer prices. All right. So if, if productivity is surging, then prices should fall, right? But they didn't. You can see that they held pretty steady, 2.8, 2.9, 2.3, a little bit here in 1908, 1.6, but positive basically every single year of the boom. Now on the right, we can see the same 6 years in the stock market. All right. This is the S&P 500. And what we can see, it more than tripled, 3.2 times. That's counting dividends being reinvested. Wow. Okay, now that's the last productivity boom all in one picture. The gains were real. We can see them in the stock market right here. They just didn't reach you on the consumer prices and the lower prices. They reached whoever already owned the assets, not who was buying the goods. So if you own things in that window during that time, you collected. If you earned a wage and you paid the prices right here, you got a price level that never went down.
