Grossly Distorted Picture
Jonathan Tasini is the national director of American Rights At Work.
Was there a connection between the October 31 blaring front-page headline in The New York Times trumpeting the latest Gross Domestic Product numbers?and the story on page five that same day about lemmings? Well, sort of. The new scientific data shows that the notion that lemmings commit mass suicide is a hoax, perpetuated by myth and an unwillingness to look at real-life experience. The same could be said of the economic data and the reporters who regurgitate the information like, well, lemmings.
In a column just a few weeks ago, I argued that our focus on the GDP is dangerous and, increasingly, does not reflect what average Americans are experiencing. The GDP tells us that dollars are flowing somewhere but sheds little light on who is benefiting from the economic activity. It treats every economic transaction as a good thing. GDP was never meant to be such a central factor in describing economic growth but it has evolved, over the years, into a central barometer, mainly for political reasons. Remember, the criticism often leveled at companies that focused on quarterly earnings just to boost share prices? The GDP is the government equivalent of the short-term focus on the economy.
Indeed, it's a sad fact that some of the very dire circumstances faced by real people boost the Gross Domestic Product statistic. Sick people with no insurance run up the costs of health care?which is rung up as economic activity. As for debt, according to the Consumer Federation of America, credit card companies mailed five billion solicitations?nearly 50 per U.S. household?trying to dole out $3 trillion in unused lines of credit in just one year. That works out to about $30,000 per household?and, when that money is spent just to make ends meet, that credit card debt is chalked up to GDP activity, even if that activity sinks more families into economic despair.
In particular, this GDP rise is misleading. As the Economic Policy Institute correctly points out, the causes "underlying this growth are temporary: one-time tax cuts lifted disposable income; mortgage refinancing increased household spending; and a decline in inventories contributed to a lower trade deficit." Translation: the GDP this quarter was on a one-time economic steroid shot, juiced up by short-term political bribes (tax cuts) that can't be repeated, home owners cashing in on low interest rates and a temporary change in lower imports.
And, yet, the media blindly embraces the GDP. Reuters gushed that, "The U.S. economy rocketed ahead at its fastest pace in more than 19 years in the third quarter of 2003 as consumers, their wallets fattened by tax cuts, went on a buying spree, an unexpectedly strong government report showed on Thursday." You think there is a connection between the distrust of the media and such a pronouncement, which was echoed by most of the major traditional media outlets? Why would millions of workers, who are mired in extremely difficult economic circumstances, trust press organs that seem out of touch with workers' lives?
The problem is that there is no long-term coherent economic plan that deals with peoples' real life struggles and an economy that is quite troubled. In the richest country in the world, more than 34.6 million people (including 12.1 million children) live below what the government says is the "poverty line." But, what about those who live above the "poverty line" of $18,244 for a family of four? How does a family of four earning the enormous sum of, say, $25,000 clothe, feed, house and educate themselves?
The unofficial unemployment rate of 6.1 percent does not tell us how many millions of people are employed in part-time jobs but who would gladly accept full-time work. More than 2.5 million manufacturing jobs have been lost since the current administration took office?56,000 disappeared in June alone. Those were good-paying jobs. In the richest country in the world, 43.6 million people do not have health insurance?more than 15 percent of our families, friends and neighbors have no protection for themselves when they fall ill. A record number of bankruptcies?an estimated 1.7 million?is forecast for 2003.
The Center for American Progress nailed some other trends: declining consumer confidence, wage income down, a disastrous financial picture for the states, and a tax cut bill that will cost $550 billion in 2013.
So, next time you see the report on the GDP, remember that, in the way it is being manipulated, it really stands for Grossly Distorted Picture?an abstract number that means very little to the average working American and says more about the absence of a true long-term economic plan.