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GDP

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In the nerd’s menagerie of economic indicators, gross domestic product is a special attraction. By definition, GDP is simply the market value of all goods and services produced in a given period. By convention, it’s often used as a measuring stick for a country’s well-being. GDP can move markets, affect elections, shape monetary policy and sway business decisions. It has its critics. Some think it doesn’t measure enough, measures too much or measures the wrong things. Some think a single-minded focus on GDP has warped markets and public policy. Others think it does what it does just fine.

GDP numbers influence economic and political debates worldwide. The World Economic Forum in mid-January unveiled a GDP alternative that focuses less on output and more on living standards, including quality of education, level of entrepreneurship and access to health care and banking services. In the U.S., investors have anxiously watched GDP reports for hints about when the Federal Reserve might raise interest rates. In China, the government’s preoccupation with its GDP targets may be spurring factories to produce unneeded goods and causing bureaucrats to hide or falsify data. This has sent investors hunting for other measures of Chinese economic performance, like steel production and car sales. India changed its method of calculating GDP in 2015, but this left economists bewildered since it showed the economy growing much faster than typical indicators like industrial production.