Three Things: GDP – A Grossly Defective Product

by Lance Roberts of Real Investment Advice
Talk Markets

Paul Wallace recently penned for Reuters an interesting article entitled: “GDP Is A Grossly Defective Product.” In the article he states:

“Yet despite its theoretical appeal, GDP is, in practice, a fallible measure – and increasingly becoming one that could be described as a grossly defective product. 

For one thing, the number shifts as more complete, up-to-date data becomes available. For another, national accountants change their definitions and approaches to better reflect the changing shape of the economy, such as the recent inclusion of research and development as investment.

He is absolutely correct.

Now, for all of you playing the home version of “Nail That GDP Number,” it was in 2013 the BEA decided that the economy was not growing fast enough and “tweaked” the GDP calculation and added in “intellectual property.” Those adjustments boosted GDP by some $500 million.

Continue Reading at…