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Economists still aren't sure exactly why employment growth seems to be lagging behind economic expansion. One reason may be found in this New York Times article: We may not be having much growth at all.
The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country. ... At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference. The same gap applies to productivity. And the spread is growing as imports do.That may help to explain why the recovery from the 2001 recession was a jobless one for many months and why the recovery from this recession is likely to generate few jobs for many months.Although I'm not sure that a .2 percent annualized difference in growth would explain the larger disparity with job creation. This also highlights the difficulty of using GDP -- basically the measure of of all goods and services produced in the U.S. in a year -- to measure the economy, since it is both a narrow gauge and increasingly irrelevant when the world economy is so interlinked. Maybe it's time to be more like the French and seek an alternative economic benchmark, one that includes measures of living standards rather than pure growth.
-- Tim Fernholz
