If the recent election demonstrated anything, it’s that there is wisdom in not putting too much faith in poll numbers or statistics.
I feel the same way about our major economic indicators. Not that I’m suggesting we ignore the gross domestic product or employment numbers – we just shouldn’t obsess over them or believe they give us a full picture.
Let’s remember how and why the modern concept of GDP was created in the first place.
GDP: A Depression Baby
While the concept of measuring an economy’s total output has been around for a long time, attempts by Presidents Hoover and Roosevelt to fight the Great Depression ran into trouble because there was little data available to measure how bad things had gotten or whether any of the turnaround attempts were working. In 1934, Congress commissioned Nobel Prize-winner Simon Kuznets, an economist with the National Bureau of Economic Research, to develop a system to measure the nation’s income.