Thursday, August 25, 2011

Measuring GDP Since the Meltdown:
How Can we Lose what we Didn't Have?

Fascinating data here on what has happened to per capita GDP since the end of 2007.  China is, of course, up--a nosebleeding  35 percent; India, 22 percent.  Of the G7, Germany just about breaks even.  US, Britain, Japan, are all down in the 4-5-6 percent negative range.   Plot it by a pre-break 10-year trend line and things are, of course, much worse: US down by 10 percent, poor Ireland, 25 percent.

Yes, well, fine, but--wait a minute.  We now--we knew then but we pretended we did not know--that a lot of that pre-break GDP was just smoke and mirrors.  Saying we're 4 percent down from peak GDP--isn't that a little like saying we lost a million bucks with Bernie Madoff?  Fact is, we never had a milion bucks with Bernie Madoff, and we never had all that GDP either.  For a fascinating discussion of these issues, go here.

1 comment:

daenku32 said...

I suppose I'm a Krugman-bot, but my understanding is that 2007 GDP was real in that is was the exact numbers that it really was. Although the wealth we were looking up was artificial, we economy had the ability conceive of it. Today, we should be able to do the same. With hopefully a better end results. And what Krugmanisque dialog would suggest, is that employment deficit is a clear indication of the real drop we did. Get those people back to work, and GDP increase by many percentage points. Real or "fake."