GDP is 65X larger
consumer debt is 444X larger
the value of mutual funds is 12,400X higher
GDP measures income and the mutual funds are one proxy for wealth, perhaps the simplest measure of the middle class's involvement in stock and bond markets.
A great deal is made of how much debt we have. Debt still seems to suggest opprobrium of some kind, but it is an instrumental part of a financially sophisticated society. Would the world really be better if no one purchased a house until they had saved the full amount to buy it outright, or if no one pursued higher education until they could do it without a loan or didn't take that beach vacation until they were in their 70s? Debt enables options and the modern access to credit means that the person going into debt needn't explain his or her reasons to anyone: only convince someone they can repay the loan.
Keep your eye on productivity instead. If we produce more, we can have more, whether it comes in the form of profits or salary or taxes and is taken now in consumption or saved for later as investment. With that in mind,
"The US Department of Labor reported that non-farm productivity grew at an annual rate of 6.6% in the second quarter, higher than economists expected," at the highest rate since 2003.
Might we be laying the foundation for real progress? Or would such a prediction sound so pollyanna-ish as to get my blogger's license revoked?
What was the non-farm productivity growth in? Growth is good only if it's in industries that can produce sustainable growth.
ReplyDeleteI don't know if auto mfg is considered in the growth number but let's say it is, then the 6.6% growth would have as 1 component an increase in auto mfg output. But that wouldn't be sustainable growth because the "cash for clunkers" program was a short term stimulus item and therefore not sustainable.
I want to see what's behind that 6.6% growth before I open a bottle of Sparkling Wine.
"If we produce more, we can have more, whether it comes in the form of profits or salary or taxes and is taken now in consumption or saved for later as investment."
ReplyDeleteHoooo-eeee, you bought that one hook, line and sinker, didn't you?
Allen - it was an increase in vineyard production. Go ahead. Open the bottle.
ReplyDeleteNunya,
I do believe this. I left out one party: consumers who get more for the same price. If we're more productive, somebody (hopefully everybody) is getting more: whether it is greedy business owners, smothering governments, or demanding employees or customers. You might not like who gets the benefit of the added productivity and how groups get that is its own discussion but if we aren't more productive any gains for one group always come at someone else's expense. It is pretty simple arithmetic.