The headlines paint a stark portrait of the amount of goods and services that American workers produce in any given year. We are in the longest decline of American productivity since the 1970s. That fact has economists pessimistic about the future chance of continued growth in this country.

Labor productivity has declined for nine straight months and fallen 0.4 percent over the last year. There is nothing complex about productivity statistics. Output per worker, according to the numbers, is drifting down when it should be going up. The last time this happened was in the 1970s, just before a nasty double-dip recession.

Increases in productivity are what makes America's middle-class what it is. Living standards improve when productivity climbs because the economy produces more goods and services with less. As a result, workers get raises, corporations add higher-paying jobs and you and I feel like we are making headway in our careers.

Contrary to what you might think, a decline in productivity does not mean that American workers are getting lazy or becoming inept in the workforce. Much of productivity depends on innovation. If a worker is using a 50-year-old tool or a 25-year old computer to produce a product, the chances are productivity is falling no matter how long or hard she is working.

Since WW II (up until 2005) annual productivity gains averaged 2.3 percent. New, more efficient methods of producing bigger and better products and services — developed during the war effort and were carried over into civilian society allowing productivity to roar. The advent of the computer especially in the 1990s goosed productivity even further and helped carry us through the postwar decades. Since then, the rate has gradually declined only averaging 1.2 percent or so since 2006 despite the "digital revolution."

You would think that these new digital innovations would have further aided productivity. After all, the internet and the development of things like emails and messaging should have made the workplace more efficient. Maybe it did provide some growth, but if so, its life cycle might have been shorter than we thought. It could be that mobile devices, networking applications and teleconferencing will provide a productivity life in the future. It is just that we are now in a lull between phases.

Some economists believe that the Baby Boomers are at fault. As experienced workers leave the labor force for retirement and are replaced by millennials with little or no experience, productivity falters even though employment overall is picking up. However, lower productivity seems to be a global phenomenon and not all countries are experiencing the Baby Boomer demographic.

A better explanation may be the lack of capital investment in this country since the financial crisis. Although corporations are flush with cash, they have been using that money to pay larger dividends or buy back their stock in the markets. Companies argue that regulations, taxes and unskilled American workers are at fault for their lack of capital spending. Falling worldwide wages may be another reason. Investing in technology and experimenting with better ways to produce a widget are expensive. Given the trend toward lower wages worldwide, it may be cheaper for companies to simply hire more workers at minimum wage and make-do with antiquated equipment or practices or move off-shore where wages are even less.

Reversing this trend may take a combination of factors. As unemployment drops and labor becomes scarce, companies will have to pay up for skilled workers. At some point, it may become economical once again to spend on plant and equipment rather than continue to pay and hire at higher and higher wages.

Then, too, after the presidential elections, some of Corporate America's complaints over taxes and regulations may be addressed by both political parties. At least, we can hope so since, without investment, innovation stalls and with it productivity.

Clearly, the decline in productivity has been and continues to be one of the major drags on returning America to its historical growth rates. Without gains in productivity, living standards flatten out and things feel like they are going backwards. Until we solve it, middle-class workers in America will continue to struggle.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Greed and fear make the world go round. While Donald Trump attempted to tap into the latter emotion in his acceptance speech this week, investors were mesmerized by the opposite emotion, at least where the stock market is concerned.

It is true that the markets, like the humans that trade them, tend to vacillate between these emotions when gains and losses begin to nudge the extremes. Of course, we would all like the markets to just continue to climb, but a line I read recently sums it up well.

"Keep in mind that betting on never-ending capital gains is the very definition of a Ponzi scheme."

The best thing that could happen to the stock market in the short-term would be to pull back. A nice orderly advance, which is not something we have experienced since the beginning of the month, is the ideal scenario for making money in the financial markets.

Too far, too soon, invites downside swoons of selling that force weak holders to panic (fear). When the market turns, and it inevitably does, it forces those same sellers to chase prices upward (greed). Just recognize that pullbacks are the cost of doing business in the equity markets. You can't avoid them and to try is a fool's game.

There is no question that the market is "overbought." By whatever metric you may use — the Vix, investor confidence, sentiment or momentum indicators — we need to pull back and we need to do it soon. It was encouraging that during the last two days of the week some selling appeared. That's a good thing.

Now these kinds of pull-backs do not need to be deep. A week or two of up and down days called a "consolidation through time" can relieve an overbought condition just as effectively as a 3-5 percent sell-off. Given that we are in earnings season, I'm hoping that a series of mixed results from some market "darlings" could deliver just that sort of period.

So far, second quarter earnings results have been better than expected. About 66 percent of those companies who have reported thus far have come in with earnings beats. That should come as no surprise. Every quarter, this game of revising down company estimates low enough to produce a beat fools fewer and fewer investors.

Normally, these companies announce before or after the close and only professional traders really benefit from any price movements. Rarely does the euphoria over an earnings beat last for more than a day or two and then the company's stock price tends to return to its pre-announcement levels. Very few professionals are willing to take a position in a stock prior to earnings. That, they say, is akin to putting all your money on black or red at the gaming tables.

Now that we are half-way through this month's convention season, the extreme volatility that so many of us had feared never surfaced. Despite some marching and protests, the GOP convention went off with barely a blip. Markets took the bombastic speeches and self-adoration that is so typical of the American political party system in stride. This coming week we will see the Democrats try to best the Republicans in their appeals to the voters. Hopefully, we will then be back to regularly scheduled programmed channels.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

As the GOP political convention winds down and the Democrat convention gears up, we continue to hear a steady stream of economic "one liners" from the candidates. We all know that fixing the economy is one of the major issues of this campaign but so far the candidates are long on words and short on specifics.

"If I'm elected," promise both candidates, there will be more jobs, trade, wages and growth. According to them, all we need do is check the right boxes come Election Day and the rest will be a foregone conclusion. Historically, Wall Street and corporations vote Republican because the GOP is good for business, while labor, minorities and the "have nots" back the Democrats. However, times and the issues are changing and so are the candidates.

Take the banking sector, for example, both parties and candidates this year have targeted Wall Street as a villain in need of chastisement. The GOP has made a re-instatement of the Depression-Era, Glass-Stegall Act a plank in their platform. Repealed under the Clinton administration, the act had prevented commercial banks from entering the capital markets.

Democrats Elizabeth Warren and Bernie Sanders (as well as the public) have blamed the banks for the entire financial crisis fiasco that was brought about by the repeal of the act. The banking sector's involvement in capital markets and the creation of derivative products such as mortgage-backed securities in large part brought down an enormous financial house of cards that threatened to sink all of us.

Free trade is another area where roles appear to be reversed between the candidates, if not the parties. Protectionism has always been part of the Democrat's list of issues, although the label itself was usually shunned as un-American. It stems from the days when labor unions were large and free trade was thought to threaten American workers' jobs and paychecks. As the party of the worker, Democrats traditionally tried to protect the blue-collar voter. Today, we have Hillary Clinton defending free-trade agreements while Donald Trump is promising to dismantle them.

Taxes, of course, are always an issue in every election. Tax reform usually occupies center stage with Republicans, with corporations the leading beneficiary of their policies. The "tax and spend" party, usually a Democrat label, however, is also promising those same corporations tax relief this time around.

Each candidate has a grab bag of goodies for individual sectors of the economy, such as Trump's promises to help oil and gas, coal and other mining companies through a change in the regulatory environment.

Hillary Clinton promises to hike the minimum wage and possibly include more illegal immigrants into the legal system that could help consumer spending and therefore the retail sector. As in so many prior elections, I discount most of these promises as political rhetoric to woo certain states and voting blocs to one side or another.

We will have to wait until next week to examine the Democrat's party platform, but I wouldn't be surprised to see more commonalities than differences between the two parties' planks. This is, in my opinion, a reflection of the populist resurgence in this country. The anger Americans are expressing over the state of the economy and their place in it has crossed party lines. Those among the party faithful who ignore it, do so at their own jeopardy.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

A series of new historical highs rewarded investors who remained patient this year and remained invested. Unless something changes in the world of central banking, there is a good chance that further gains are in store for the stock market.

There will be pullbacks from time to time as the markets digest their gains. We have enjoyed several back-to-back gains in the stock market. The S&P 500 Index, for example, has climbed over 100 points without one down day. That is not something that can continue unabated.

The key to all this upside momentum is, of course, the worldwide largesse of governments and central banks. Take, for example, the events in England this week. Although economists and traders were expecting the UK's central bank to cut interest rates by half a percent; they didn't. But, they also said that investors should expect a rate cut in a few weeks, once they have a chance to examine the most recent economic data from the Brexit fall out.

Then there is Japan. Prime Minister Shinzo Abe's ruling coalition won the majority of seats in Japan's upper house elections last Sunday. Investors interpreted that win as a win for "Abenomics." Readers should recall that Abe and Japan's central bank has poured mountains of money into the Japanese economy. Despite that effort, Japan's economy remains in limbo.

Abe and his government plan to spend even more in the months to come. Given that we are talking about the world's third largest economy, more stimuli will wash around the world holding interest rates down and financial markets up.

Of course, our own central bank's efforts to hike interest rates is now "on hold" for the foreseeable future. That is thanks to potential worries about the impact on Europe and the UK from the Brexit vote. Once again, global markets are in a familiar environment of slow economic growth, declining interest rates (and currencies) with nowhere to go but the stock markets.

Speaking of which, we are in the first week of second quarter earnings season. As the game begins, analysts' forecasts for this quarter have been ratcheted down to 4-5 percent declines in company earnings overall. That is the sixth quarter in a row where corporate earnings have experienced a negative growth rate. The Street has been hoping (and betting) that company managements will be giving us better guidance on their future business this time around.

So far that has been the case. The big banks have been able to "beat" estimates this week.

The financial sector overall has lagged the market all year. It is difficult for banks to do well when interest rates are this low. Hopefully, these earnings results will put a fire under the sector.

Retail is another group where disappointments have weighed heavily on the sector. Although, these companies won't report for several weeks, traders are also counting on good news out of at least some companies.

You may be wondering how long all of this central bank stimulus, quarterly earnings games and other financial machinations will support the markets. It has done so for at least the last five years. Even the bankers tell us that without additional government spending, their spending efforts can do no more than maintain the present environment. The bears are right: we are in an environment of smoke and mirrors. Yet, we can worry all we want about that while the markets climb higher. The "don't fight the Fed"  mentality is still the flavor of the month until it isn't, so enjoy it.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

As the cost of college continues to soar in America, more and more states are offering tax breaks to families who are trying to save as much as they can for their kid's educational future.

The state of Massachusetts is deciding whether or not they will join the list this week.

The most commonly used vehicle for that purpose is the "qualified tuition plan," more commonly known as a 529 Plan. These plans are sponsored by states, state agencies or educational institutions and were originally authorized by Section 529 of the Internal Revenue Service Code. They are tax-free on a federal level and all but eight of the 42 states that have an income tax allow families and individuals to claim a tax deduction on college savings.

The idea for savers is that the state offers you two kinds of plans. A plan to prepay for your children's college educational costs at today's tuition rates at a certain college. In the other plan, rather than prepaying tuition, you are simply saving for future college costs by contributing to a plan that can be used at any school (not just those in your state) and for all qualified higher education expenses, including room and board.

Your plan contributions are invested by professional money managers in what are called age-based portfolios. Some plans also offer a selection of stocks and bonds as well. In the age-based funds, your contributions are tilted at first toward stock funds, which have more risk but also higher growth; and as your child approaches college age, the investments are skewed more toward bonds, which are normally more conservative and less risky. There are no taxes on dividends, interest or capital gains and withdrawals for college are tax free by the federal government and by most states that have an income tax.

These plans allow families to contribute as little as $25/month or as much as you want, limited only by the lifetime contribution limit set by each state. Normally this limit ranges from $100,000 on the low end to $270,000 on the other end of the spectrum.

One nice feature of these plans (for those who can afford it), is that individuals can fund a plan with up to $70,000 (or $140,000 with your spouse) in the first year without running afoul of the gift tax. Normally, any contributions you make on behalf of an individual that exceeds $14,000 annually ($28,000 for a couple) is subject to the gift tax. A 529 plan allows you to contribute basically five years' worth of gifts all at once without tax.

Each state decides what kind of tax break they will offer to their residents. They vary substantially. In Rhode Island, for example, the deduction ranges between $500 to $1,000 a year.

But in states like North Carolina you can deduct as much as $2,500-$5,000. New York and Connecticut offer as much as $10,000 to $20,000 in tax deductions. In Massachusetts, the Legislature is voting on a deduction of $1,000 per individual or $2,000 per couple.

Although some complain that the performance of these plans is not that competitive, they are still one of the only games in town for consumers to save for education and enjoy tax advantages while they do so.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.