Why GDP Doesn’t Really Measure National Economic Health Or Wealth

Contrary to the accepted way of thinking, recessions are not about negative growth in GDP for at least two consecutive quarters. It is about the liquidations of activities that spring up on the back of the loose monetary policies of the central bank. In addition, movements in GDP cannot tell us what is going on in the real economy. If anything, it can actually provide us with a false impression. A strong GDP growth rate in most cases is likely to be associated with the intensive squandering of the pool of real wealth. Hence, despite “good GDP” data many more individuals may find it much harder to make ends meet.

 

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