If the GDP Is Up, Why Is America Down? (1995)

From the article

>By itself the GDP tells very little. Simply a measure of total output (the dollar value of finished goods and services), it assumes that everything produced is by definition “goods." It does not distinguish between costs and benefits, between productive and destructive activities, or between sustainable and unsustainable ones.

From what I understand, GDP is calculated based on goods "produced", which is NOT the same as goods "sold". The difference between the two is, "inventory", which can expand and contract to make the equation balance.

So here is the crazy part, you could have farmers producing records amount of food with no way to get it to market and it ends up rotting. Meanwhile, prices spike because there's nothing to buy at the Grocery Store - it can't physically get there. But the food has already been PRODUCED so it's all counted in GDP and it's counted at the higher price-spiked level. It just doesn't go anywhere but into the garbage eventually.

So as a result you have a huge official GDP number and the appearance the economy is awesome, but people are starving or straining to afford food for consumption and farmers are going broke. This example can be applied across many industries.

Great GDP numbers these days don't mean a whole lot.