“Skousen is introducing a whole new species. This is one of the most important WSJ op-ed articles in years.”
— James Hagerbaumer, Economic Forecaster
The editors of the Wall Street Journal gave me top billing in yesterday’s op-ed page: “At Last, a Better Economic Measure.” The editors don’t let the author see the headline, but they captured it perfectly. The graphic cartoon was also perfect — check it out.
Basically, I contend that Gross Output (GO) is better than gross domestic product (GDP) in measuring the economy. GO is an attempt to measure spending at all stages of production. It corrects the fallacy fostered by GDP that consumer spending drives the economy. Actually, business spending at all stages of production is larger than consumer spending when you use GO as the measure of economic activity (more than 50%, compared to less than 40% for consumer spending).
I think I’m on to something. In my original work, “The Structure of Production” (New York University Press, 1990, 2007 new introduction), I suggest we need to look at the economy from the point of view of:
- Stages of production (Gross Output)… not just final output (GDP).
- The structure of interest rates (yield curve)… not just the 10-year Treasury rate.
- Relative price indexes… not just the Consumer Price Index (CPI).
- The structure of employment… not just the unemployment rate.
Read more about the U.S. government’s successful adoption of my Gross Output statistic at Eagle Daily Investor.