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Economic Growth That Experts Can’t Count by the New York Times

By:   •  February 19, 2017  •  Article Review  •  566 Words (3 Pages)  •  1,159 Views

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Sofia Rucker

Professor Tung

ECON 112 Sec 01

17 February 2017

#1 Article Analysis

Summary:

This article, “Economic Growth that Experts Can’t Count” by the New York Times explores the idea that the United States’ GDP may be growing at a rate much faster than is shown in the numbers collected. It critiques the dated method of calculating GDP based primarily on production. This is because our current economy is now comprised mostly on services and information. Our current calculation of GDP does not quantify the value of free services at companies like Google, internet speed, less pollution, and most importantly, “digital dark matter” (hours spent streaming, virus services, etc.). It concludes that GDP may not be accurately calculating our economy’s innovation and improvements. The results of this causes an incorrect idea of the true state of our growth and productivity.

Key Economic Terms:

Gross Domestic Product, Goods and Services, Economic Growth, Consumption

Analysis:

        By definition, Gross Domestic Product is the measurement of the total income of everyone in the economy and the total expenditure on the economy’s output of goods and services. It is the measurement of the nation’s income. This number has much power in our nation’s and citizens’ processes. It can affect how much spending we devote to consumer goods, military defense, and even education. Because of it immense power, I believe we must be careful and conscious of how the number is collected. As discussed in class, GDP is calculated by adding consumption, investment, government purchases, and net exports. In this article, it claims that we may be leaving out some crucial numbers in the calculation of our nation’s income. These numbers are those from digital services, productivity, and information systems. I believe that our economy has transformed much from when the calculation of GDP was introduced in the 1930s. We are now heavily digitalized and focus much of our time in technology products and services. For this reason, we need to rethink the process of measuring GDP.  Productivity and free technological services have a vital place in calculating GDP. They are the crucial unmeasured goods and services. If included, we would have a much more accurate idea of the state of our economy.

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