Charles Schwab and I have several things in common — we were born in California, we each have five children and we both made the latest “Forbes 400 Richest People in America” issue (to be released next week). He’s on page 129 as the #63 richest person in America, and I’m mentioned by name on p. 22 for my gross output (GO) model. (I took a more academic road to success.)
In this issue, Steve Forbes endorses my GO model, saying GO is a “far more comprehensive, realistic and enlightening picture than GDP. It’s like the difference between an X-ray and a CAT scan.”
GO measures spending at all stages of production, including the all-important supply chain, and gross domestic product (GDP) measures final output only. Big difference!
GDP is $21 trillion in 2019, while GO is over $45 trillion.
GO not only demonstrates that business spending is far more important than consumer spending, but it’s also a leading indicator. GO has slowed considerably in 2019, suggesting we are heading toward a mild recession.
In his column, Forbes takes the federal officials at the Bureau of Economic Analysis (BEA) to task for not releasing GO on a timely basis. It comes out three months later than GDP! (The next release is Oct. 29 for second-quarter GO.)
Forbes stated, “President Trump should immediately order the BEA to get off its duff and issue GO at the same time it does GDP.”
Good news! I’m pleased to announce that Brian Moyer, the BEA director, informed me that they plan to release both GO and GDP at the same time by next year… not unlike publicly traded companies issuing “top line” (sales) and “bottom line” (profits) every quarter. Economics finally has caught up to accounting and finance in the 21st century!
Steve Forbes’ column on GO is now available to read by clicking here.