|Its Magic Illusion 101|
As time goes by small events often seem to drift into the distance or be forgotten, it could be I'm getting a little soft in the head or this is how I explain having to do research when I write. The Bureau of Economic Analysis (BEA) has made a significant change on how they calculate the GDP. It slid by unnoticed by many people but they changed how they classified and recorded expenditures for R&D and for entertainment, literary, and artistic originals. An announcement of this change was made by the BEA during February of 2013, this resulted in an increase in the GDP. This kind of "bump" means that a gain of 2% today is in reality less than a gain of 2% years ago. This means we are comparing apples to oranges.
Gross Domestic Product is defined as the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.Within that definition it appears those in power have discovered some wiggle room and even before that a debate exist as to what it really tells us. When we delve into all of this it is easy to see this is not simple at all and that the GDP can be a master illusion when we look at how it filters down to both society and the Main Street economy. The first comprehensive set of measures of national income was developed by economist Simon Kuznets who in 1934 told the US Congress the formula was problematic, he said.