James Pethokoukis, in The Week, argues that the economy isn’t as bad as it seems.
“What if things are actually a lot better than we think — or at least better than GDP figures suggest? Think about it: Month after month, the economy is generating about a quarter million net new jobs. The unemployment rate is close to 5 percent. Corporate profit margins are at record highs, with stock values not far behind. And Silicon Valley is on fire.”
“So why then do the all-important GDP numbers — the broadest measures of economic activity — show a perpetual funk? It’s a puzzle for which Goldman Sachs has a simple answer: We are measuring productivity wrong, and therefore we are measuring GDP wrong.”
“U.S. inflation is lower than we think due to sharply falling, ‘quality adjusted’ IT hardware and software prices — and thus real economic growth and productivity are higher. GDP growth might actually be close to 3 percent right now, which would be more in sync with what’s happening in labor markets and the tech sector. Oh, and it also means real incomes are growing faster than we think, which is why the economists are ‘skeptical of confident pronouncements’ that American living standards aren’t improving as fast as they used to. By the way, new analysis by the Peterson Institute suggests worker incomes have pretty much been keeping up with productivity gains. So perhaps more good news for the 99 percent.”