From the New York Times:
During the boom years of the Bush presidency — remember them? — economic growth was an especially unreliable indicator of how most Americans were doing.
Our problem, again, is that semantically dead word ‘economics’. ‘Economic growth’ is an especially fun one, not least because it actually refers to growth in GDP, which is something that’s kind of confusing anyway. Look at this catalog of misery:
The numbers were impressive, but the gains were lopsided, benefiting executives and investors far more than hourly workers and salaried employees. Because the growth was fueled by reckless lending and borrowing, it created an illusion of wealth even as many Americans lost ground…
The government reported that the economy grew at a surprising 3.3 percent in the second quarter, while productivity (the measure of how much workers accomplish per hour) soared. Unfortunately, those bounces did not mean a rebound in the lives of most Americans.
Growth rose, but so did unemployment. Productivity surged, but wages fell. Fixing that disconnect is the central economic challenge for the next president.
Increased exports were responsible for last spring’s strong economic growth numbers. But selling more abroad has not led to more manufacturing jobs or working-class pay raises at home.
Oh my. One point is that the popular metrics – like ‘growth’ – clearly aren’t capturing everything that’s relevant, but we knew that. Another would be that it’s therefore pretty odd that we continue to use the word economics when, lo, it’s actually two degrees away from making sense: first, it usually means something like GDP or unemployment or productivity or something, and second, even that wouldn’t actually tell a proper story.
Yet a third point is that the title of the article is “Real Life Economy”: seems like there’s a bit of a trust issue developing with the metrics the media reports when they talk about ‘the economy’. Economists look silly again, but was it their fault? And are we surprised?