SINGAPORE (May 27): National politics in the US has become enslaved to macroeconomic indicators that have little bearing on true well-being. For many commentators, the snapshot growth rate of 3.2% for the first quarter of 2019, coupled with a decline in the unemployment rate to 3.6% in April, implies that President Donald Trump’s economic policies have been vindicated, and some suggest that his re-election chances have improved as a result.
But this interpretation overlooks what these indicators fail to measure. And what they fail to measure happens to be what really counts for the public.
In defending the 2017 tax cut, to which he attributes an additional 1.1% annual GDP growth for 2018-2019, Harvard economist Robert J Barro writes, “I take it as self-evident that faster economic growth is better than slower economic growth”, because “millions of people benefit from higher growth rates, which are typically accompanied by higher wages and lower unemployment, which especially help the worse-off.”