GDP and Other Mysteries

The statistics that drive our big-picture economic thinking — GDP, unemployment figures, and inflation rates, among others — have come to be regarded as nearly sacrosanct. Investors, policymakers, and everyday consumers rely on them to make decisions trivial and earthshaking alike, often measured in trillions of dollars. Zachary Karabell, in his book The Leading Indicators: A Short History of the Numbers That Rule Our World, traces the history of these numbers and questions how useful they actually are.

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2012 Economic Outlook: Why Things Are Better Than We Think

Years from now, when we look back at 2011, it may be remembered as one of the best worst years of the early 21st century. You’d be hard-pressed to come up with an extended period where people were more negative, yet remarkably, in the United States at least, not much actually happened. A summer debt impasse looked dramatic but in the end was resolved, and markets went up and down wildly yet ended largely where they started or better. Judged by every major economic indicator, it was the most stable period in a long while, with every sign that 2012 will be better yet. There is only one not-so-small problem: almost no one believes it.

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Made in China?

Right now, the markets are focused on two stories: the continuing unwinding of the sub-prime mess and the increasing number of recalls of products made in China. At this point, the roiling of the financial markets is the bigger of these two stories. However, the drum beat of negative press about China may have equally significant consequences going forward. With stories such as “More Ripples From Chinese Product Troubles,” (New York Times, August 15), and “Tainted Imports: Are You Next?” (BusinessWeek SmallBiz, Aug/Sept 2007), and even recent posts on the HuffingtonPost (gasp!), the chorus has been growing that China, in more ways than one, represents a threat to the United States. If it’s not currency “manipulation” then it’s unsafe products, from tires to pet food to toys. Already, there is legislation being prepared that would take a harder line against China and the twin effects of currency and the trade deficit. Whatever version of the bill actually gets passed is likely to be more muted than the rhetoric, but the very fact of it demonstrates the growing anti-Chinese sentiment that is almost certain to get worse before it gets better.

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