How a country counts

Gross domestic product, in classroom words, is a recipe for the market value of final goods and services produced inside a border in a period. Expenditure, income, and production are three ways to count the same dinner in the usual textbook. They do not always land on the same number in the land. Revisions exist. A first print is not scripture.

Simon Kuznets’s National Income, 1929–1932 (NBER, 1934) is the usual U.S. classroom door to a modern national-income count. The U.S. Commerce Department’s accounts grew through the 1930s and 1940s. The United Nations System of National Accounts had a 1953 edition, then 1968, 1993, and 2008. Nominative: Kuznets, NBER, Commerce, and the SNA stay with those shops. We do not run a statistical office.

GDP leaves things out: home work that is not sold, many environmental costs, leisure, distribution. Kuznets himself warned against treating a count as a measure of welfare. A later slogan — “GDP is not well-being” — is often sold as a discovery. It is a warning that sat near the start. We will keep the warning. We will not use it as a dare to ignore the count, and we will not use the count as a dare to buy an index.

The S&P 500® is a recipe of members. Nominative: that mark stays with S&P Dow Jones Indices LLC. It is not GDP. A stock tape can print up while the recipe for the year’s production does something else. Mixing them is how a person thinks “the economy” is a ticker. Look. Do not buy. Not a broker. Not a planner. Not a campaign. A famous year is a memory, not a coupon.