The Hunt Is On for a New Way to Measure the World’s Economic Output
Gross domestic product is so twentieth century.
The measure has risen from humble beginnings during the Great Depression to be an essential gauge for governments and central banks the world over. Long-term investors allocate capital based on its findings; traders buy and sell stocks, bonds, currencies and commodities in the blink of an eye after readings flash on their screens. One such closely-watched report comes this Friday, when the U.S. releases its revised estimate of second-quarter GDP.
Problem is — whether compiled by production, income or expenditure approaches — GDP is increasingly struggling to keep up with the pace of economic change.
In an age where $10 can buy one compact disc or a month of unlimited music streaming, it’s getting tougher to put a price on economic output. And as an aggregate measure that ignores distribution effects, GDP has masked rising inequalities that helped fuel anti-establishment politicians like Donald Trump or the backlash that contributed to Brexit. Read more…
The Hunt Is On for a New Way to Measure the World’s Economic Output
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