GDP Is Largely A Metric Joke

Certain people who love and embrace “the free market” and talking about “what the markets are doing” like to point to very aggregate numbers like “unemployment rate” or “GDP growth” or “jobs created” and say, “The economy is doing very well!” The thing is: those are egghead numbers, collected in the aggregate and not understood very well by most people, and many “indicators of economic success vs. ruin” are understood better as a binary 0–1 paradigm. It’s the same as fertility vs. miscarriages, honestly. If you have a living child, and parenthood is your goal, you’re a “1.” If you don’t, you’re a “0.” If you want/need a job and lack one, you’re a “0,” whereas someone with a job is a “1.” Some number like “3.8%” means nothing to a job-seeker.

Good article here.

Two good pull quotes. First one:

The mortal enemy of Bidenomics isn’t Donald Trump; it’s a reliance on aggregate and average numbers that mask the nature of the economy Americans experience. Focusing on G.D.P. is a mistake, as it obscures the range of financial success and hardship in an economy as unequal as that of the United States.

Second one:

In a nation this unequal, the income generated by a growing G.D.P. is so unevenly shared that the impression of widespread prosperity falls apart. The most recent U.S. data shows that the top 5 percent of households by income received 23.5 percent of aggregate household income in 2022 and the top 20 percent got over half. In sharp contrast, the bottom 40 percent received 11.2 percent, a scant return for all their hard work.

So even when GDP does rise, most of it goes to a certain set of people. Understood, and logical. Owners, founders, current executives, etc.

What’s mind-boggling about the over-focus on GDP to me is that it completely defeats the idea of how much we supposedly value motherhood. Stay-at-home motherhood, which is admittedly a goal of many, contributes essentially nothing to GDP. Should it? Yes. But that would require lots of new egghead numbers and theories that no one would understand and we’d argue about anyway. If you claim the “most important job” in the world is parenting, which I’d say seems accurate, then how can you look at GDP and not guffaw? It’s just an aggregate output number. It has no bearing on individual existences out in the ether, or the raising of children, or anything anyone cares about.

Here’s the reality of the modern moment:

1. Many of us feel very broke, even those making about $275,000/annum.
2. As a result, many of us feel stuck and are "celebrating" a 4.9% interest rate.

Inflation is real, and we feel it at real levels:

• Housing
• Groceries
• Child care
• People tipping at bars ( felt it )
• Services

When politicians or other “leaders” discuss these issues, we need to avoid discussing them in aggregate macro-terms. It doesn’t accomplish much. I don’t know how exactly to bring grocery prices down given all the mergers in that vertical and given that grocers and their employees need to be paid, but it would be helpful if we stopped pointing to numbers that don’t reflect “on-the-ground” realities.