Is it too much to ask that we start a new index of actual production and decouple that from "spending".
I will vote to not include as a product the Fed printing money.
Thanks Bflo - I nominate you for head of the New GDP Initiative.
I am humbled.
Seriously, though, the GDP and the importance attached to it by the government and the media is one of my biggest sore points. For example, consumer goods spending is now much higher than it was before the recession hit in 2008. Yet, we are certainly not growing -- unemployment is horrendous.
That's because entrepreneurs are not spending their capital on expansion -- they're maintaining production with some of it and just putting the rest in money market funds in an attempt to preserve it till the business outlook once again turns positive.
Keynesians deny the fact that consumer spending and capital investment are two entirely different processes. And the fact that consumers are spending at high levels does not necessarily mean that entrepreneurs will invest in more production capacity if they fear that future business conditions will render those investments unprofitable.
The "consumer spending" crowd is baffled, however, by the stagnant economy and assumes, therefore, that the government must spend more to get that GDP even higher.
Sigh. I'm glad you've started to see the light, though.