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Victor C. Bolles

G!@$&   D*%#@%&!   P@*?%#!



While watching Squawk Box on CNBC the other day, host Joe Kernan, prior to a discussion of China Trade Policy, asked his guest, Derek Scissors of the American Enterprise Institute, what he thought of the second estimate of the first quarter Gross Domestic Product (GDP) that had been reported earlier in the show. Joe, like most people including the president and most of Congress, is fixated on the quarterly growth rate of GDP.


Dr. Scissors’ response surprised Joe. Dr. Scissors said that GDP didn’t matter; that it was a 1930’s statistic and that he focuses on other metrics such as household income and labor force participation. I was intrigued. Some of you might know from reading my book, Principled Policy (2016), that I am no fan of GDP. But Dr. Scissors is even more outspoken on the defects of GDP as a tool to measure economic performance.


First of all let me say that our fascination with GDP has more to do with behavioral economics than real economics (or maybe behavioral economics is real economics). US (and global) economic performance is just too complex to be distilled down to a single number (to which we add a decimal point in order to give the illusion of even greater accuracy).


So I queried Dr. Scissors about his ideas regarding GDP (most of his articles at AEI are about China and India) and he sent me links to two interesti