Reinhart and Rogoff story shows how important it is to check your indicators

This month two academic researchers showed that there were errors in the calculations behind the claim by economists Carmen Reinhart and Kenneth Rogoff that the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one [...]

Are Americans getting wealthier or poorer? It depends on how you measure “wealth.”

The standard measure of wealth is GDP per capita. The chart below shows that Americans have been getting continually wealthier for decades, with a few blips here and there (source of data). The measure of wealth—Gross Domestic Product, is based on the dollar value of economic transactions. Such a measure depends crucially on the definition [...]

Is Samuelson still right about the ability of leading economic indicators to lead? or indicate?

This week the Conference Board’s  leading economic indicators were released in the US and Canada.  Both forecast, according to reports, somewhat weak, economic growth in the months ahead. Nobel winning economist Paul Samuelson quipped in 1966 that “Wall Street indexes predicted nine out of the last five recessions.”  Are they any better today? Are the [...]

GDP a “a misleading indicator of economic progress”

A Singapore MP points out the weakness of the GDP, and we explain why background information is as or more important that the measurements themselves.