Question

You are at a holiday dinner with your family. Your relative makes the argument that the U.S. economy is resurgent and has recovered from the Great Recession of 2007 – 2009. Economic growth, as measured by GDP, has been increasing from one quarter to the next. You beg to differ. How would you structure your argument with your relative? Hint: you should think about two things, the accuracy of GDP measures, and whether GDP should be considered a comprehensive measure of a countries well-being.

Answer 1

• Even if GDP had been increasing from one quarter to another, it's accuracy could be question based on the fact that GDP per capita could decrease which would imply that an average person has potentially less output. In other words, GDP per capita seems a better indicator rather than GDP.
• Secondly, GDP is not an effective measure of a country's well being as it neglects factors such as leisure , levels of physics and mental health, non market activities, quality of healthcare, effects to the environment, etc.