We're In The Money

The estimated growth in US GDP has been revised upward to an annual rate of 4.4% based on 1Q 2004 data released by the Commerce Department. The annual GDP now tallies in at $10.7 Trillion. 4.4% of $10.7T is roughly $471B. I'm no economist, but let's look at a few numbers here. If you see an error or something I've missed, you're wrong please inform me, include your home address, and notify your next of kin.

Health care costs are 15% of GDP and have been rising at about 15% per year, although some predictions say the 2004 increase will slow to 10%. Taking the optimistic number, that $150B is a 1.4% increase in GDP, or close to a third of the GDP growth.

Occupation Iraqi Freedom comes in conservatively at about $100B - public dollars spent. That's a .9% increase of GDP or just over one fifth of the increased US economic performance.

Almost half of the increase is already accounted for.

Americans buy over 8 million barrels of oil per day. A barrell is 42 gallons. That's 336 million gallons per day or 122 billion per year. Motor vehicles use about 43% of that, or 53 billion gallons. If gas prices are up 50 cents per gallon, that's another $26B - just from the pump - that will be included in the GDP, but isn't really what I would call helpful to our economic picture. Personally, I think we ought to be purchasing less gasoline, casting concerns about conservation's impact on GDP aside.

Using GDP as a measure of economic performance is akin to using weight as a measure of a person's health. Or perhaps, more accurately, as a measure of a person's strength.

These calculations are greatly oversimplified, I admit; but reading this article in Waste News this morning quoting Bob Slaughter of National Petrochemical and Refiners Association as saying 'Federal policymakers have often neglected the impact of environmental regulations on fuel supply' in written testimony. "This attitude must end," he said. "A healthy and growing U.S. economy requires a steady, secure, and predictable supply of petroleum products" got me thinking about broader questions of measuring economic health vs economic growth. Those environmental regulations require installation of scrubbers, extensive environmental monitoring, vital ecological safeguards; this is exactly the kind of stuff we need, largely because businesses fill the niches created by the regulations. Someone needs to design, build and install those scrubbers, study and develop those monitoring strategies, engineer those environmental safeguards.

It seems pretty hypocritical to complain that these transactions that actually do improve our economy are "expenses" while touting growth - including the examples above - as if they were somehow magically "income."