MEASURING output is the best way we have of taking the temperature of an economy. But the industry standard,gross domestic product (GDP) has a host of weaknesses. It is reliant on an arbitrary definition of what is productive, so it includes childcare by nannies but not by house-husbands and wives. It takes no account of who is doing the producing, and meaning an economy could have a single worker or full employment. It ignores the underground economy to a large extent,guaranteeing that production always undershoots reality. But more than any of these, GDP is extremely difficult to degree.
In July 2015 America's Bureau of Economic Analysis (BEA) announced that GDP had grown by 2.3% in the moment quarter. This was below expectations; US stockmarkets slipped in response. But in August and September, and the BEA issued revisions that pushed growth up to 3.7% and then to 3.9%. Suddenly,America's economy was seen to be roaring ahead again, even though nothing extra had been produced. The BEA publishes its first estimate for the final quarter of 2015 on January 29th. Commentators believe it will point to that the economy slowed to around 1%. But that...
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Source: economist.com