ʺBeyond Gross Domestic Product: A New, Revolutionary Way to Measure the Economyʺ
Starting in spring 2014, the Bureau of Economic Analysis will release a breakthrough new economic statistic on a quarterly basis. It’s called Gross Output, a measure of total sales volume at all stages of production. Gross Output is almost twice the size of GDP, the standard yardstick for measuring final goods and services produced in a year. This is the first new economic aggregate since Gross Domestic Product (GDP) was introduced over fifty years ago. Gross Output attempts to measure total sales from the production of raw materials through intermediate producers to final retail. Based on the author’s research, Gross Output is a better indicator of the business cycle, and most consistent with economic growth theory. Gross Output is a measure of the “make” economy, while GDP represents the “use” economy. Both are essential to understanding how the economy works. While GDP is a good measure of national economic performance, it has a major flaw: In limiting itself to final output, GDP largely ignores or downplays the “make” economy, that is, the supply chain and intermediate stages of production needed to produce all those finished goods and services.
With a Ph.D. in economics and a focus on the principles of free-market capitalism and “Austrian” economics, Skousen is actively involved in free-market and liberty think tanks throughout the world. He frequently speaks and writes articles for organizations such as the Cato Institute, the Foundation for Economic Education, the Libertarian Party, the Council for National Policy and the Mt. Pelerin Society. He is also the producer of FreedomFest, an annual conference billed as the world’s largest gathering of free minds on liberty. More information on FreedomFest can be found at www.freedomfest.com.
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