Letters to the Editor
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Gross Domestic Product
The most common mistake the standard market 'observers' make is to look at quarterly GDP and say, "2 consecutive quarters' equals a recession.
The first reason is that figures are adjusted periodically, and all of a sudden the past can be changed into a recession.
The GDP ignores many other human factors to identify a recession, and adds up ANY economic activity as 'growth.' So if General Dynamics gets a military order for missiles for Iraq, that is 'growth.' Or if Warren Buffett buys 7 new houses, that is growth. And the Iraq War, that little engine of military Keynesianism, is chugging away each and every day. Every dime spent, wasted, lost, or overpaid is included in 'growth.' Except missiles do not lead to more production or better lives for most Americans, only destruction or storage.
In other words, it hides very well what is actually happening to real people. This is because it treats useless or replacement economic activity as always beneficial, ignores work done at home, and does not look at income disparities when looking at GDP.
This crude economic production figure - GDP - is not accurate enough to reflect the majority of people's lives. And it was designed just that way, to obscure what is happening, just as inflation and unemployment figures are also inaccurate for the very same reason.