Reply #60: GDP changes all the time; different models are used as well [View All]

as different deflators; must remind that the ONLY reason we use GDP is that it's easy; it's a fairly poor measure of any sort of prosperity.

Let's remind ourselves of what it really is (and all it purports to be): The total market value of all final goods produced in one country in one year.

These goods are estimated to have been produced and are estimated to be worth the figures claimed. No warranty is made that any of these goods will ever actually be sold at their market price or at any price. The mere existence of clearance sales and job marketers like Big Lots belie any such assumption.

In addition, the categories of final and intermediate goods are a guess as well. If you buy bread for your home consumption, it's a final good. If you own a restaurant and buy that same loaf of break to make sandwiches for sale, it's an intermediate good, and doesn't count in GDP. Instead, the sandwiches do.

Problems with GDP: currency fluctuations may not be completely accounted for, affecting the final value of export and import goods and affecting the final value of GDP; new technologies with prices that normally fall over time (like consumer electronics) may lag in accurate market pricing by six months or more, causing GDP to be overstated. And more. Just Google it up.

Again: we don't have any way to directly measure actual sales, profits, or jobs, so we use a method that is fairly easy, though fraught with potential for error. So don't quote these figures too often as Gospel. They're revised each month for a reason, right?

They are a guess using guesses and variable data. At low speeds, accuracy is not guaranteed. When an economy is burning ahead, it's easier to say things are moving forward. When all is lost, like the Great Depression, it's easier to say things are moving backward. For the rest of the range, it's harder.

Like politics, all economies are local. If you cannot get a job, and most of the people you know cannot get a job, it is quite ludicrous to claim things are great. If all the jobs you can see are of the crap variety, it's ludicrous to claim things are great.

Things ain't great. We need to stop looking at guesses over how many trees there are out there and take a walk in the woods. There's wolves loose out there!