GDP: Let’s count what really matters – by Jayati Ghosh

Tracking four alternative economic indicators would provide a very different view of comparative performance than GDP.

Despite the well-known problems with using gross domestic product as an indicator of human development, policy-makers around the world still seem obsessed with it. Governments seek to promote GDP growth through all possible means, often regardless of the wider consequences for the planet and the distribution of rewards. The current focus on quarterly growth reflects a particularly unhealthy short-term perspective. And yet the International Monetary Fund and other multilateral organisations refer to GDP in all assessments of economic performance and make it the sole focus of their forecasts.

Read more at Let’s count what really matters – Jayati Ghosh

EU Economy: In the EU, GDP down by 0.4% and employment down by 0.3%

In the first quarter of 2021, seasonally adjusted GDP decreased by 0.6% in the euro areaand by 0.4% in the EU,compared with the previous quarter, according to a flash estimate published by Eurostat, the statistical office of the European Union. These declines follow falls in the fourth quarter of 2020(-0.7% in the euro areaand -0.5% in the EU) after a strong rebound in the third quarter of 2020 (+12.5% in the euro areaand +11.7% in the EU) and the sharpest decreases since the time series started in 1995 observed inthe second quarter of 2020 (-11.6% in the euro areaand -11.2% in the EU

Read more at: 2-18052021-AP-EN.pdf

The GDP: A Better Way to Measure GDP - by Justin Talbot Zorn and Ben Beachy

The news of the record-shattering 33.1% percent annualized GDP growth in the U.S. in the third quarter of 2020 seemed, to most people, like a farce. It’s not that the data — reflecting the rebound from an abysmal spring and summer — was technically wrong. It’s that it bore no resemblance whatsoever to most people’s lived experience.

At a time of a massive public health crisis, long lines at food banks, record-breaking hurricanes, glaring racial disparities, and mounting feelings of stress and overwhelm, no one wants to hear about the historic triumph of an abstract number that’s supposed to tell us how well our society is doing. This raises the question: Why do we measure our economy according to a metric that says so little about our well-being?

This isn’t just an academic musing. It’s a practical question for governments today. The measurement that most societies use as the benchmark for national progress doesn’t meaningfully account for successful management of priorities like public health, economic equity, climate action, or racial justice. This poses a problem because, in government, as in business, “we manage what we measure.”

Read more at: A Better Way to Measure GDP

U.S. economy contracted an estimated 3.5% in 2020, worst drop since WW2

The U.S. economy contracted 3.5 per cent in 2020, the Commerce Department reported Thursday, the worst economic freeze since the end of the Second World War.

The report estimated that the nation's gross domestic product — its total output of goods and services — slowed sharply in the October-December quarter after a record 33.4 per cent surge in the July-September quarter. That gain had followed a record-shattering annual plunge of 31.4 per cent in the April-June quarter.

The economy grew at a four per cent annual rate in the final three months of 2020.

Read more at:U.S. economy contracted an estimated 3.5% in 2020, worst drop since WW2 | CBC News

U.S. Economy Slows Sharply As Pandemic Resurges - by Scott Horsley

The nation's economic engine slowed considerably in recent months, as it faced off against a winter wave of coronavirus infections.

The Commerce Department reported Thursday that the nation's gross domestic product grew just under 1% in October, November and December — a marked downshift from the three previous months. On an annualized basis, the economy grew 4% in the fourth quarter.

GDP was 2.5% smaller at the end of the year than when it began. Economic activity plunged last March and April when the pandemic took hold. The economy staged a partial comeback in the summer and early fall, only to falter in the last three months of the year.

Read more at: U.S. Economy Slows Sharply As Pandemic Resurges : NPR

China's economy accelerates as virus recovery gains strength

A woman wearing a face mask walks out of the Auchan supermarket in Beijing on Monday. China's economic growth accelerated to 4.9 per cent over a year earlier in the three months ending in September, up from the previous quarter's 3.2 per cent. (Wang Zhao/AFP via Getty Images)

China's shaky economic recovery from the coronavirus pandemic is gaining strength as consumers return to shopping malls and auto dealerships while the United States and Europe endure painful contractions.

Growth in the world's second-largest economy accelerated to 4.9 per cent over a year earlier in the three months ending in September, up from the previous quarter's 3.2 per cent, official data showed Monday. Retail spending rebounded to above pre-virus levels for the first time and factory output rose, boosted by demand for exports of masks and other medical supplies.

Read more at: China's economy accelerates as virus recovery gains strength | CBC News

EU Economy: Eurozone GDP drops 12.1% in record pandemic plunge

The eurozone's economy took an unprecedented hit due to coronavirus pandemic, with the bloc's GDP contracting by 12.1% in the second quarter of 2020, EU officials said in preliminary estimates published on Friday.

Only 19 out of EU's 27 member states use the euro as currency. The hit was slightly milder for European Union as a whole

Read more at;
Eurozone GDP drops 12.1% in record pandemic plunge | News | DW | 31.07.2020

USA -ECONOMY:U.S. second-quarter GDP plunged by a historic 32.9%

The U.S. economy saw the biggest quarterly plunge in activity ever, though the plummet in the second quarter wasn't as bad as feared.

Gross domestic product from April to June plunged 32.9% on an annualized basis, according to the Commerce Department's first reading on the data released Thursday. Economists surveyed by Dow Jones had been looking for a drop of 34.7%.

Neither the Great Depression nor the Great Recession nor any of the more than three dozen economic slumps over the past two centuries have ever caused such a sharp drain over so short a period of time.

Read more at:
U.S. second-quarter GDP plunged by a historic 32.9%

USA: GDP sinks 4.8% in the first quarter, biggest drop since 2008 and there is worse to come

The collapse in the U.S. economy caused by the coronavirus pandemic triggered the biggest drop in gross domestic product in the first quarter since 2008 in a...

Read more at: 
https://www.marketwatch.com/story/gdp-sinks-48-in-the-first-quarter---biggest-drop-since-2008-and-worst-is-yet-to-come-2020-04-29

USA - GDP : Trump's double-false claim about GDP

President Donald Trump told Fox Business Network the country reached a rate of growth last quarter that hadn't been seen in 14 years. That's false in two ways and correct in none.

TRUMP: "We just did 3.2 ... 3.2 is a number that they haven't hit in 14 years." — interview broadcast Wednesday.

THE FACTS: It's nowhere close to the best in 14 years, by any measure. The rise in the first quarter of 3.2% in the gross national product was only the best since last year. It was surpassed in the second and third quarters with rates of 4.2% and 3.4% respectively.

Perhaps he meant to say it was the best first-quarter growth in 14 years. But that's not right, either. It's the best in four years.

The economy grew by 3.3% in the first quarter of 2015. So President Barack Obama has a better first-quarter record than Trump to date

Read  more at: AP FACT CHECK: Trump's double-false claim about GDP

GDP - a questionable measurement: 5 ways GDP gets it totally wrong as a measure of our success - by David Pilling

The beauty of gross domestic product is its single figure. It squishes all of human activity into a couple of digits, like a frog jammed into a matchbox. As this image of an unfortunate amphibian suggests, this condensing is also GDP’s flaw. How can the sum total of everything we do as human beings be so compacted? How can our activity be conflated with something as complex, nuanced and contested as our wellbeing?

GDP's inventor Simon Kuznets was adamant that his measure had nothing to do with wellbeing. But too often we confuse the two. For seven decades, gross domestic product has been the global elite’s go-to number. Fast growth, as measured by GDP, has been considered a mark of success in its own right, rather than as a means to an end, no matter how the fruits of that growth are invested or shared. If something has to be sacrificed to get GDP growth moving, whether it be clean air, public services, or equality of opportunity, then so be it.

GDP is how we rank countries and judge their performance. It is the denominator of choice. It determines how much a country can borrow and at what rate. But GDP is well past its sell-by date, as people are starting to realise. However brilliant the concept, a measure that was invented in the manufacturing age as a means of fighting the Depression is becoming less and less capable of imparting sensible signals about complex modern economies.

Pointing out the defects of GDP and even tentatively suggesting alternatives is no longer controversial. Former French President Nicolas Sarkozy commissioned a panel led by Joseph Stiglitz, a Nobel economist, to examine the issue. It was creating a dangerous “gulf of incomprehension”, Sarkozy said, between experts sure of their knowledge and citizens “whose experience of life is completely out of sync with the story told by the data”.

GDP is a gross number. It is the sum total of everything we produce over a given period. It includes cars built, Beethoven symphonies played and broadband connections made. But it also counts plastic waste bobbing in the ocean, burglar alarms and petrol consumed while stuck in traffic.

Kuznets was uneasy about a measure that treated all production equally. He wanted to subtract, rather than add, things he considered detrimental to human wellbeing, such as arms, financial speculation and advertising. You may disagree with his priorities. The point is that GDP makes no distinction. From the perspective of global GDP, Kim Jong-un’s nuclear warheads do just as well as hospital beds or apple pie.

Read more at: 5 ways GDP gets it totally wrong as a measure of our success | World Economic Forum

Trump - Tariffs: European Union releases 10-page list of potential targets for retaliatory tariffs on U.S. products - by David J. Lynch and Michael Birnbaum

The European Union on Friday made public a 10-page list of American products that are potential targets for retaliation if President Trump refuses to exempt the allied bloc from his new tariffs on steel and aluminum imports.

The list offered the most detailed glimpse to date of the likely targets for E.U. action, including products selected for maximum political impact in the United States. Among them: bourbon, a specialty of Kentucky, Senate Majority Leader Mitch McConnell’s home state; cranberries, which are grown in House Speaker Paul D. Ryan’s native Wisconsin; orange juice from Florida; and tobacco from North Carolina. Florida and North Carolina are considered political swing states with key electoral votes.

“It’s pretty clear they’re trying to wake up American legislators, who are the only ones in government who can influence the president on this issue,” said Chad Bown, a trade expert at the Peterson Institute for International Economics.

Still, the European Union said its response to Trump’s tariffs is designed to conform with World Trade Organization rules, signaling that Europe hopes to avoid a full-blown rupture with the unpredictable U.S. president.

Note EU-Digest: it is high time the EU stops playing footsie with the US and takes their gloves off. There are much tougher ways to deal with the US when it comes to convincing their ego-maniac President.

Trump better take note that the adjusted GDP of the 28 EU member nations  is bigger than both China and the US, based on the traditional list of world's economic super powers.

The EU can do a lot of harm to the US economy if Donald Trump continues on this destructive route
  
Read : moreEuropean Union releases 10-page list of potential targets for retaliatory tariffs on U.S. products - The Washington Post

EU: Almost one - third of EU GDP spent on social protection

Since 2010 social protection expenditure in the European Union (EU) has increased slightly.

From 28.6% of GDP in 2010 to 29.0 % in 2015 according to data from the Eurostat the Statistical office of the EU.

In 2015, the EU's 28 Member States earmarked €200 billion of public expenditure for 'defence'. This is equivalent to only 1.4% of GDP.

By contrast, Washington's military expenditure "only" amounts to 3.5 percent of GDP, which is often questioned because no exact dollar figure is ever given In China, that falls to 2.1 percent. Israel spent around $23 billion on its armed forces in 2014 and SIPRI estimated that this amounted to 5.2 percent of its GDP

Click here for additional information re EU

Brexit: Britain dips to bottom of G7 economic growth table

BREXIT: Too little Too Late

Britain has fallen from the top to the bottom of the league of G7 leading economies in the year since the Brexit vote, with official data recently showing slower growth than previously thought.

The pound dropped as much as 0.7 per cent against the euro on the back of weaker-than-expected GDP figures, a report that London’s house prices fell for the first time in nine years, and higher levels of consumer debt.

But despite the poor economic data, Mark Carney hinted that interest rates were still likely to rise in November. “If the economy continues on the track that it’s been on, and all indications are that it is, in the relatively near term we can expect that interest rates would increase somewhat,” the Bank of England governor said recently..

Some economists who think the BoE will raise interest rates from 0.25 per cent to 0.5 per cent at its Monetary Policy Committee meeting in November were more cautious following  Recent data release. Alan Clarke, of Scotiabank, said: “I’m sticking to my call for a hike in November, but I’m much more nervous now than I was before this data release.”

Having been the fastest-growing economy in the G7 on the eve of the EU referendum, new figures from the Office for National Statistics in Britain showed UK growth below the US, Japan, Germany, France, Italy and Canada. 

EU-Digest

EU Economy: Every one of the European Union's 28 member economies is growing simultaneously for the first time since 2007

Quartz reports that the European Union is facing its biggest crisis since… well, since its last big crisis. The perpetually problematic union is threatening to come undone, with Britain in the process of quitting the bloc and numerous populist movements elsewhere also threatening to sever ties.

But economically speaking, the bloc is performing better than it has in a long while. For the first time since 2007, all 28 of the union’s member economies are growing at the same time, on an annual basis.

Inflation-adjusted GDP in the EU will rise 1.8% this year and next, according to the European Commission’s latest projections. This is expected to push unemployment across the region to its lowest rate since 2009. For its part, GDP in the euro zone has risen for 15 consecutive quarters.

This is not to say that Europe’s economy is thriving, which is readily apparent by how successfully populist politicians have been blaming Brussels for their countries’ apparent financial malaise.

The European Commission warns that the risks to its forecasts are “exceptionally large,” thanks to the unclear intentions of US president Donald Trump, high-stakes elections across Europe this year, and the ongoing Brexit negotiations.

If Trump follows through on pledges to spend big on infrastructure, it could provide a boost to the EU’s export-oriented members. But if he doubles down on his “America First” policy, it could harm transatlantic trade. Meanwhile, a messy Brexit, tighter monetary policy from the US Federal Reserve, and a shaky Chinese economy could all derail the European economy’s slow but steady recovery.

Pierre Moscovici, the European commissioner for economic and financial affairs, warned that the benefits of growth must be shared more widely—both between and within EU countries—for it to be appreciated by citizens. “With uncertainty at such high levels, it’s more important than ever that we use all policy tools to support growth,” he said. “Above all, we must ensure that its benefits are felt in all parts of the euro area and all segments of society.”

EU-Digest

European Banking industry: Euro governments have recovered less than half of bank aid

Eurozone governments have recovered less than half of the financial aid provided to banks since the global financial crisis, the European Central Bank said, pointing out that the outstanding guarantees pose an additional risk.

Governments have offered a wide range of bank support from guarantees to purchasing assets and providing equity to prevent a credit crunch since the financial crisis commenced in 2008.

The 40 per cent recovery rate so far is low by international comparison and risks remain as outstanding guarantees are worth 2.7 per cent of the Eurozone’s GDP, the ECB said in an economic bulletin on Wednesday.

“The recovery rates to date are particularly low in Ireland, Cyprus and Portugal, while they are relatively high in the Netherlands,” it said in a paper that forms part of its larger economic update, due out on Thursday.

“The recovery rates ... are improving, but are still relatively low by historical standards.” The central bank added that nearly a fifth of the total debt increase in the bloc from 65 per cent of GDP in 2008 to 92 per cent at the end of 2014 was related to the bank aid.

Read more: Euro governments have recovered less than half of bank aid — European Central Bank | GulfNews.com

EU economy is bigger than the US - by Bob Bryan

As a single country, the US is the biggest economy in the world.

But given its close ties, you could easily argue that the countries of the European Union make for one big economy. Indeed, you would be arguing that it's the world's largest economy.

The adjusted GDP of the 28 EU member nations is bigger than both China and the US, the traditional list of world's economic super powers.

"In nominal U.S. dollar terms, the European Union (plus Norway, Switzerland, Iceland) accounted for 25.4% of world output in 2014 according to data from the International Monetary Fund.  That was greater than America’s share (22.5%) and well in excess of China’s—13.4%," said Quinlan.

The EU consumer is also on top. The EU, plus periphery nations, accounted for 28.5% of all consumer spending in 2014, according to Quinlan, above both the 26.6% spent by US consumers and the 15.6% spent by the emerging economies of the Brazil, Russia, India and China combined. This attracts global companies to the region.

"Gaining access to wealthy consumers is among the primary reasons that US companies venture overseas, and hence the continued attraction of Europe to US firms," wrote Quinlan.

So while Greece has little direct impact on the US, stabilizing the massive EU economy should still be a huge concern for Americans and the rest of the world.

Read more: CHARTS: EU economy is bigger than the US - Business Insid

Global Economy: China's Casino Moment - by Holger Schmieding

First boom, now bust: The Chinese equity market may soon serve as a standard case of what can go wrong in the financial sphere.

But seen from afar, do we have to worry? Not much, at least not about China. The Chinese equity market does not have much to do with the real economy. It plays no major role in financing Chinese investment.
China’s equity market is also not a leading indicator for the country’s business cycle. It follows its own dynamics driven by liquidity, regulation and the usual panics and manias to which young financial markets are even more prone than established ones.

The 150% surge which the Shanghai Composite Index registered from mid-2014 to its peak on June 12, 2015 did not lead to a major surge in business investment and Chinese GDP growth.

The fact that the market erased roughly half of these gains until yesterday will not herald a major decline in Chinese investment. However, there will be some impact on corners of the private sector — especially on consumption of luxury goods.

Read more: China's Casino Moment - The Globalist

India growth figures baffle economists

The Indian economy grew by 7.5% between October and December compared with the same period a year earlier, official figures say.

But there was confusion regarding the statistics after the way in which the gross domestic product (GDP) figure was calculated was changed.

Economists warned the figures needed to be treated with caution.

Growth for the previous three months was also revised up sharply to 8.2% from an earlier figure of 5.3%.

And India's statistics ministry revised up its forecast for annual economic growth to 7.4% for the year to the end of March.

That compared with a previous forecast of 6.9% using the new formula, and 4.7% before the revised formula was introduced.

The country's new way of calculating GDP has baffled analysts since its release last month.

India said the new formula is closer to international standards. But analysts say the new data does not correlate with other economic indicators, including industrial and factory production.

Read more: BBC News - India growth figures baffle economists

The EU’s GDP Is Bigger Than Thought — But Hold the Bubbly - by Gabriele Steinhauser

On Oct. 17, the European Union will get some good news: That day, the bloc’s statistics office will announce that the EU economy is actually around 2.5% bigger than previously thought.

But don’t break out the bubbly just yet. The expected boost in gross domestic product — based on early estimates from Eurostat — is the result of changes to the way the EU calculates national accounts, rather than an actual uptick in economic activity. Eurostat says the new accounting system, known as ESA 2010, will give a more accurate picture of what gets produced, spent and invested within the 28-country bloc.

The most significant change under ESA 2010 is that spending on research and development — whether by companies or the government — will be counted as an investment that creates value, or assets, for the future, just like spending on new machinery or infrastructure. Previously, this was recorded as “intermediate consumption” meaning it was deemed to be consumed at the end of each year or quarter.

Eurostat says the new treatment of R&D alone will lift EU GDP by around 1.9% and the changes vary widely from country to country. Finland, for instance, has said that the capitalization of R&D spending would increase its 2011 GDP by 3.7%, while countries such as Poland and Hungary expect little change.

Another boost to GDP figures will come from a similar change in the treatment of military expenditure, which will also be viewed as an investment for the future. “Military vessels are not ‘consumed’ at the end of their first year (except if sunk at war!). These types of weapon systems can be used over many years,” explains Eurostat. Military investment is expected to increase EU GDP by about 0.1%.

Along with the implementation of ESA 2010, many EU states are also updating the way they calculate contributions to GDP from illicit activities — ranging from drug sales, to prostitution, to the plumber paid under the table. The U.K. has said its 2009 GDP would have been £10 billion higher had those activities been included, although Eurostat insists that in most countries these changes won’t make much of an impact.

Read more: The EU’s GDP Is Bigger Than Thought — But Hold the Bubbly - Real Time Brussels - WSJ