Isn't government spending counted as part of GDP? (It's counted as consumption)
For example, http://www.federalreserve.gov/econresdata/scf/scf_2007.htm
I sometimes wonder what policy would look like if the dominant economic priority was the increase total wealth, rather than economic activity.
Or if everyone has 10 billion dollars in gold in their vaults in aggregate, if the price of gold rises, on paper their wealth would increase. But if everyone actually tried to expend their gold then the price of gold would decrease, but much more production would happen in the economy. If the price of tech stocks octuples then paper wealth increases but GDP does not necessarily change.
Or, if everyone just spent their money twice as quickly (e.g. the velocity of money increases). The economy would be able to do twice as much, but total 'wealth' need not necessarily change.
'wealth' is entangled with money and prices. The amount of production is affected by those things probably but not as directly.
I'm trying to figure out what government policy might look like if it was directed toward increasing net household wealth. Just hoarding gold does little for the economy. But this is irrelevant. At issue is what it would look like, economically, to focus on increasing a nation's economic wealth (after inflation). It seems like it would be awfully difficult to increase after-inflation wealth without a fair amount of genuine value being created, no?
Could focusing on combined household wealth cause there to be more attention paid to median household wealth? And how might economic policy behave differently if increasing this was its focus?
Another reason to pay closer attention to wealth is that it doesn't suffer from the "broken window fallacy".