Getting Deep With GDP
Last week, the Commerce Department reported that American gross domestic product (GDP) grew by 4.1 percent in the second quarter of the year. And that’s good. It means the economy is doing well.
Gross domestic product is “the broadest measure of goods and services produced in the economy.” It’s one of the ways in which we can judge the health of the economy.
In addition, President Trump praised the economic growth and took credit for it in a speech on Friday morning. But some wondered if President Trump deserved it.
Economist Kenneth Rogoff told Scott Simon on Weekend Edition Saturday:
“The truth of the matter is presidents don’t have much to do with the economy. There are things presidents can do. So we had the tax cuts. We had the reform to the corporate tax law. And that’s unquestionably goosing up the economy, now, maybe, adding half a percent to this 4.1 percent number. But that’s temporary. That’s not going to last.”
Besides, wages are stagnating, even while the economy is doing well. The Harvard Business Review says “[s]ince the early 1970s, the hourly inflation-adjusted wages received by the typical worker have barely risen, growing only 0.2% per year.” Will wages ever catch up to this economic growth?
Greg Ip, Chief economics commentator, The Wall Street Journal; author of “Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe”; @greg_ip
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