this post was submitted on 12 Feb 2024
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GDP just says how well a country is doing and is a good summarization for how imports and exports are doing. However, it also takes into account military spending and real estate, so you could argue the GDP can be inflated via those two measures (to a degree) to look better.
Consumer Price Index does a better job of showing how well the economy is doing for its citizenry.
CPI is not good either. Inflation can be fine for most citizens, when they have enough negotiating power to raise their wages with it. In that case it wipes out lenders. That happened in Weimar Germany after WW1, as the unions were strong enough to raise wages fast enough.
Imho something like Genuine Progress Indicator does a better job at measuring how well an economy is doing.
A measure stops being a good measure when it becomes a target.
It doesn’t show how well a country is doing, because GDP is not a direct measure of aggregate utility. For example: GDP can go up, but if it causes the Gini coefficient to rise, a country could be doing much worse than before.