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$2.7 trillion buys "spectacular" GDP

By Peter St. Onge
web posted February 5, 2024

Fresh GDP numbers recently came in and it was a blowout.

The kind of blowout that only a $2.7 trillion government deficit can buy while the private economy crumbles around it.

Another couple blowout GDP reports like this and Americans will be living under an overpass.

GDP

Biden's GDP Miracle

First the numbers. The Bureau of Economic Analysis reported GDP for the fourth quarter came in at 3.3% annualized. Which blew away estimates of 2.0%.

And it brought growth for all of last year to 2.5%.

Which is very healthy. On paper.

Note the numbers are preliminary, so they're subject to revision.

Still, the regime media rolled out their finest adjectives: CNN called it "shocking" – in a good way. The New York Times called it "stunning and spectacular."

So what's the problem? Debt.

Your grand-kids bought it all. And then some.

To see why, in the past 12 months the federal deficit increased by $1.3 trillion. Yet we only got half that in GDP – about $600 billion. In other words, everything else shrank.

It's even worse for that brave and stunning Q4 – there we got just $300 billion in extra GDP for – wait for it – $834 billion of new federal debt.

GDP Dollar

GDP vs. Wealth

Remember that GDP isn't measuring wealth, it's measuring spending – production which is sold.

As Megan McArdle put it, GDP "counts the dollar value of our output, but not the actual improvement in our lives, or even in our economic condition."

For example, if you dig holes and fill them, it's GDP. In fact, you could build a missile, blow up the Golden Gate bridge and every house within 5 miles of it, and it shows up as GDP. The missile cost money after all, and the government paid for it.

Of course, mainstream media – indeed, mainstream economics – pretends that GDP is identical to wealth. Pumping out articles celebrating GDP as prosperity.

Components of GDP

That's close enough when it's private firms or individuals producing more to sell more — in that case, rising GDP means the country is getting richer. Because more stuff is being produced.

But it's actually the opposite when it's government spending. Because the government's job is taking wealth and lighting it on fire. That means when GDP is growing from government spending it's not measuring wealth.

It's measuring dissipation of wealth at best, destruction of wealth at worst.

Essentially, the pace at which we're going Soviet, replacing private wealth with government waste.

So translating that brave and stunning GDP into the real world, we're destroying wealth at rates not seen since 2008.

This actually lines up with what we've seen in jobs. Over half the jobs last year were actually government and government related social service jobs.

Jobs chart

In some states it was literally more than all the jobs created – in other words, the private sector is shrinking.

All these government jobs, of course, are unproductive – they're not making us more prosperous as a society.

On the contrary, they're taking wealth earned from productive activities and squandering them on vote-buying or worse – think of the wealth-destruction contained in a single EPA bureaucrat.

What's Next?

The lapdog media will keep playing alone with the government statisticians and the gaslighting academics.

They'll keep trashing regular Americans for posting their grocery bills and mortgage payments, praying they can maintain the illusion long enough for the next election.

Fortunately, there's millions of us who can see that the emperor is buck nekkid. ESR

Peter St. Onge writes articles about Economics and Freedom. He's an economist at the Heritage Foundation, a Fellow at the Mises Institute, and a former professor at Taiwan's Feng Chia University. His website is www.ProfStOnge.com.

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