Did the economy grow 3.7%
last quarter, or 0.6%? In Eric Morath's
article " By Another Measure, U.S. Economic Growth Has Nearly Stalled This
Year", published in the Wall Street Journal.
"A big upward revision to gross
domestic product, now seen increasing at a
3.7% pace in the second quarter, has reassured some
economists that the economy is on solid footing heading
into the second half of the year.
But a less closely watched number in
the Commerce Department report provides a fair amount of
caution.
An alternative measure of economic
output, gross domestic income, advanced at a much slower 0.6% pace last
quarter. By that gauge, economic growth barely inched ahead in the first half
of the year. (GDI advanced at 0.4% pace in the first quarter versus a 0.6%
increase for GDP.)"
Both the GDI and GDP measure the size
of the economy.
•
GDP measures production based on what is
spent by consumers, businesses and governments
•
GDI measures the income (wages,
corporate profits, taxes) generated from production.
They should be the same - why aren't
they? Could government spending and postponed consumer spending be fueling GDP
while the variables in GDI have not changed at the same rate? If corporations
were selling more and not passing along to workers in the form of wages then
wages wouldn't rise but corporate profits would.
Could it be 'the experiments' like
Kansas no small business tax and tax breaks for relocation be causing this
difference?
