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GDP (Gross Domestic Product)

Today the GDP report was released and no one was surprised by the results. As a matter of fact the report shows that spending was pulled back the most in the last 28 years. A clear sign that a recession is close at hand if not here already.
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According to the Commerce Department on Tuesday, the GDP shrank at a 0.5% annual rate during the July-September quarter. The report shows that the economy had slowed due to the housing, credit as well as the financial issues that continue to intensify.
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GDP measures the value of all goods and services produced within the U.S. and is considered the best barometer of the country’s economic fitness. That is what we are lead to believe, but in all true intent and purpose, it doesn’t do that at all.
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The GDP (Gross Domestic Product) was not designed to be the indicator of this country’s growth. It was originally to gauge the country’s wartime production capacity. According to the GDP, no matter what the buying and selling is for it’s looked upon as something good for the economy. It does not matter it it’s for the well being of the people or not, it’s all lumped in together.
Let’s look at all the money that was spent after hurricane Katrina destroyed New Orleans. The $100+ billion that was spent was considered a good thing within the GDP report.
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It doesn’t matter what the money is spent on as long as it’s spent, that’s how the GDP looks upon it. Crime is also looked favorably when calculated into the report. What about social welfare and social issues? they too are considered a good thing for GDP. That’s right, all those lawsuit, divorces and car accidents, according to the GDP they are good things for the economy.
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That’s why a few years ago some people got together and came up with a new way to gauge our growth in the country. It’s called the GPI (Genuine Progress Indicator). I wrote a post called GDP Vs GPI a few months ago and seeing how the GDP report came out yesterday it just made me want to touch base on the article again for those who might have missed it.

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