Predicting the Markets:

Chapter 3 Charts:
Predicting Technology &
Productivity
Yardeni Research, Inc.

April 15, 2021

Dr. Edward Yardeni

Chief Investment Strategist

Mali Quintana
Senior Economist
info@yardenibook.com

Please visit our sites at

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thinking outside the box

Table Of Contents Table Of Contents
Predicting Technology 3-17

April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 1.
40 40
S&P 500 INFORMATION TECHNOLOGY: EARNINGS & MARKET-CAP SHARES
(percent)
35 35

30 30

Capitalization Share (26.8)

Mar
Earnings Share* (22.8)
25 25

20 20

15 15

10 10

yardeni.com
5 5
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

* Using S&P 500 12-month forward consensus expected operating earnings.

Source: Thomson Reuters I/B/E/S.

Figure 2.
55 55
FORWARD P/E RATIOS FOR S&P 500*

45 45

S&P 500 (22.1)

35 S&P 500 Technology (26.0) 35

Mar
25 25

15 15

yardeni.com
5 5
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

* S&P 500 stock price index divided by S&P 500 12-month forward consensus expected operating earnings per share.
Source: Thomson Reuters I/B/E/S.

Page 3 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 3.
60 60
IT EQUIPMENT, SOFTWARE, AND RESEARCH & DEVELOPMENT SPENDING
(as a percent of total capital spending in nominal GDP)
55 55

50 Q4 50
Percent of Total Capital Spending
IT Equipment, Software, and R&D
45 IT Equipment & Software 45

40 40

35 35

Q4
30 30

25 25

20 20

15 15

10 10

yardeni.com
5 5
59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

Source: Bureau of Economic Analysis.

Figure 4.
875 875
775
IT CAPITAL SPENDING IMPLICIT PRICE DEFLATORS 775
(2012=100, ratio scale)
675 675

575 575

475 475

375 375

275 Implicit Price Deflators 275

Information Processing Equipment
Software

175 175

yardeni.com Q4
75 75
59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23

Source: Bureau of Economic Analysis.

Page 4 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 5.
1210 1210
1010 PRIVATE NONRESIDENTIAL FIXED INVESTMENT IN REAL GDP: Q4 1010
810 IT EQUIPMENT & SOFTWARE 810
(billion 2012 dollars, saar, ratio scale)
610 610

410 410
Information Processing Equipment
Plus Software
210 210

yardeni.com
10 10
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22

Source: Bureau of Economic Analysis.

Figure 6.
680 680
605 PRIVATE NONRESIDENTIAL FIXED INVESTMENT IN REAL GDP: 605
530 530
455 IT EQUIPMENT & SOFTWARE Q4 455
380 (billion 2012 dollars, saar, ratio scale) 380
305 305
230 230

155 155

80 80

Software
Information Processing Equipment

yardeni.com
5 5
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Page 5 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 7.
204.1 204.1
170.1 PRIVATE NONRESIDENTIAL FIXED INVESTMENT IN REAL GDP: Q4 170.1
136.1 136.1
COMPUTERS & PERIPHERAL EQUIPIMENT
102.1 102.1
(billion dollars, saar, ratio scale)
68.1 68.1

34.1 34.1

Computers &
Peripheral Equipment

yardeni.com
.1 .1
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Figure 8.
470 470
420 PRIVATE NONRESIDENTIAL FIXED INVESTMENT IN REAL GDP: Q4 420
370 OTHER INFORMATION PROCESSING EQUIPMENT 370
320 (billion 2012 dollars, saar, ratio scale) 320
270 270

220 220

170 170

120 Other Information 120

Processing Equipment

70 70

yardeni.com
20 20
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Page 6 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 9.
2500 2500
2400 RETAIL SALES: IN-STORE GAFO* & ONLINE 2400
2300 (billion dollars, saar) Feb 2300
2200 2200
2100 2100
2000 2000
1900 1900
1800 1800
1700 1700
1600 1600
1500 1500
1400 1400
1300 1300
1200 1200
1100 1100
1000 1000
900 In-Store GAFO* + Online** 900
800 In-Store GAFO* 800
700 Online** 700
600 600
500 500
400 400
300 300
200 200
100 yardeni.com 100
0 0
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* GAFO (general merchandise, apparel and accessories, furniture, and other sales) includes retailers that specialize in department-store types of merchandise
such as furniture & home furnishings, electronics & appliances, clothing & accessories, sporting goods, hobby, book, and music, general merchandise,
office supply, stationery, and gift stores.
** Electronic shopping and mail order houses.
Source: Census Bureau and Haver Analytics.
Figure 10.
65 65
RETAIL SALES: ONLINE SHOPPING
60 (as a percent of In-Store GAFO* + Online**) 60

55 55

50 50

45 45
Feb
40 40
yardeni.com

35 35

30 30

25 25

20 20

15 15

10 10

5 5
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

* GAFO (general merchandise, apparel and accessories, furniture, and other sales) includes retailers that specialize in department-store types of merchandise
such as furniture & home furnishings, electronics & appliances, clothing & accessories, sporting goods, hobby, book, and music, general merchandise,
office supply, stationery, and gift stores.
** Electronic shopping and mail order houses.
Source: Census Bureau and Haver Analytics.

Page 7 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 11.
230 230
210 PERSONAL CONSUMPTION EXPENDITURES IN NOMINAL GDP 210
190 Feb 190
(billion dollars, saar, ratio scale)
170 170
150 150
130 130
110 Computers & Peripheral Equipment Plus 110
Computer Software & Accessories
90 90

70 70

50 50

30 30

yardeni.com
10 10
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Figure 12.
142 142
122 PERSONAL CONSUMPTION EXPENDITURES IN NOMINAL GDP 122
102 (billion dollars, saar, ratio scale) 102
82 82
Feb
62 62

42 42

22 22
Nominal Consumer Spending on IT
Computers & Peripheral Equipment
Computer Software & Accessories

yardeni.com
2 2
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Page 8 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 13.
400.1 400.1
300.1 PERSONAL CONSUMPTION EXPENDITURES IN REAL GDP Feb 300.1
200.1 (billion 2012 dollars, saar, ratio scale) 200.1

100.1 100.1
Computers & Peripheral Equipment Plus
Computer Software & Accessories

yardeni.com
.1 .1
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Figure 14.
240.1 240.1
180.1 PERSONAL CONSUMPTION EXPENDITURES IN REAL GDP 180.1
120.1
(billion 2012 dollars, saar, ratio scale) 120.1
Feb

60.1 60.1

Real Consumer Spending on IT

Computer Software & Accessories
Computers & Peripheral Equipment

yardeni.com
.1 .1
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Page 9 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 15.
185 185
COMPUTERS AND PERIPHERAL EQUIPMENT IN NOMINAL GDP
(billion dollars, saar, ratio scale) Q4
140 140

95 95

Feb

50 50

Computers & Peripheral Equipment

Nominal Capital Spending
Nominal Consumer Spending

yardeni.com
5 5
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Figure 16.
200.1 200.1
150.1 COMPUTERS AND PERIPHERAL EQUIPMENT IN REAL GDP Q4 150.1
(billion 2012 dollars, saar, ratio scale) Feb
100.1 100.1

50.1 50.1

Computers & Peripheral Equipment

Real Consumer Spending
Real Capital Spending

yardeni.com
.1 .1
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Page 10 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 17.
541 541
451 SOFTWARE IN NOMINAL GDP Q4 451
361 (billion dollars, saar, ratio scale) 361
271 271

181 181
Feb
91 91

Software
Nominal Consumer Spending
Nominal Capital Spending

yardeni.com
1 1
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Figure 18.
680.1 680.1
510.1 SOFTWARE IN REAL GDP Q4 510.1
340.1 (billion 2012 dollars, saar, ratio scale) 340.1
Feb
170.1 170.1

Software
Real Capital Spending
Real Consumer Spending

yardeni.com
.1 .1
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Economic Analysis.

Page 11 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 19.
70 70
AGE COMPOSITION OF LABOR FORCE*
(percent)
65 65
Mar
Percent of Labor Force
35-65 Years & Older
60 16-34 Year Olds 60

55 55

50 50

45 45
1962

1980
40 40

35 Mar 35

yardeni.com
30 30
52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Oldest and youngest Baby Boomers turned 16 in 1962 and 1980, respectively.
Source: Bureau of Labor Statistics.

Figure 20.
6 6
NONFARM BUSINESS PRODUCTIVITY & REAL HOURLY COMPENSATION
(20-quarter percent change, annual rate)

Productivity
Real Hourly Compensation
4 (using NFB deflator) 4

2 2
Q4

yardeni.com
0 0
52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Labor Statistics.

Page 12 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 21.
10 10
PRODUCTIVITY MEASURES
(20-quarter percent change, annual rate)
8 8

Productivity Cycle
Nonfarm Business
6 Manufacturing 6
Nonfinancial Corporations

4 4

2 2
Q4

0 0

yardeni.com
-2 -2
52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics.

Figure 22.
8 8
PRODUCTIVITY: MANUFACTURING
7 7

6 Manufacturing Productivity 6
(20-quarter percent change, annual rate)
5 5

4 4

3 3

2 2

1 1
Q4
Feb
0 0
Manufacturing Productivity Proxy*
-1 (60-month percent change, annual rate) -1

-2 -2

yardeni.com
-3 -3
52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Manufacturing industrial production divided by payroll employment in manufacturing.

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics and Federal Reserve Board.

Page 13 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 23.
150 150
Feb
130 MANUFACTURING PRODUCTION & CAPACITY 130
(2012=100, ratio scale) C
110 110
Feb
90 90

Manufacturing
70 70
Production
Capacity
50 50

30 30

yardeni.com
10 10
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Note: C = China joined WTO on December 11, 2001. Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Federal Reserve Board.

Figure 24.
165 165
155 MANUFACTURING PRODUCTIVITY & CAPACITY 155
145 (ratio scale) 145
Feb
135 135
125 125

115 115

105 105
C Q4
95 95

85 85

Manufacturing
75 Capacity 75
(index = 100 during 2012)
65 Productivity 65
(index = 100 during 2009)

55 55

yardeni.com
45 45
87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Note: C = China joined WTO on December 11, 2001. Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics and Federal Reserve Board.

Page 14 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 25.
10 10
MANUFACTURING CAPACITY
(yearly percent change) C
8 8

6 6

4 4

2 2

0 0
Feb

-2 -2

yardeni.com
-4 -4
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

C = China joined WTO on December 11, 2001.

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Federal Reserve Board.

Figure 26.
10 10
MANUFACTURING CAPACITY vs. MANUFACTURING PRODUCTIVITY PROXY

8 8

6 6

4 4

2 2

0 0
Feb
Capacity: Manufacturing
(yearly percent change)
-2 Manufacturing Productivity Proxy* -2
(60-month percent change, annual rate)

yardeni.com
-4 -4
52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Manufacturing industrial production divided by payroll employment in manufacturing.

Source: Federal Reserve Board and Bureau of Labor Statistics.

Page 15 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 27.
14 14
US CRUDE OIL FIELD PRODUCTION
(million barrels per day, weekly, nsa)

12 12

4/9

10 10

8 8

6 6

4 4

yardeni.com
2 2
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Source: US Department of Energy and Haver Analytics.

Figure 28.
40 40
FARM & MANUFACTURING EMPLOYMENT SHARES

30 Manufacturing Payrolls 30
(as % of total nonfarm payrolls)
Farm Payrolls
(as % of total payrolls including farm)

20 20

10 10
Mar

yardeni.com
0 0
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Labor Statistics.

Page 16 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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 Predicting Technology
Figure 29.
90 90
SERVICE-PRODUCING PAYROLL EMPLOYMENT
(as a percent of civilian total nonfarm payrolls)
Mar
85 85

80 80

75 75

70 70

65 65

yardeni.com
60 60
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Labor Statistics.

Figure 30.
6.0 6.0
PAYROLL EMPLOYMENT: INFORMATION INDUSTRIES*
(millions, sa)

5.5 5.5

5.0 5.0

4.5 4.5

4.0 4.0

Mar

yardeni.com
3.5 3.5
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Publishing; Motion Picture & Sound Recording; Broadcast; Telecommunications; Data Processing, Hosting, and Related Services, Computer &
Electronic Products Manufacturing, and Other Information Services.
Source: Bureau of Labor Statistics.

Page 17 / April 15, 2021 / Chapter 3 Charts: Predicting Technology & Productivity Yardeni Research, Inc.
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