We all hear about economic indicators all the time, but perhaps we don’t question them as much as we should. Take gross domestic product (GDP), which measures the growth of the economy. We learned today that in the last three months of 2011, we clocked in at a very modest 2.8 percent -- below expectations.
After a number of incremental but positive indicators that have come out in the past couple of months -- the so-called "green shoots" -- today's fourth quarter GDP was a reminder that our economy is still very fragile. Like a green shoot of a plant or a tree, our economy needs a lot of nurturing to really grow.
Mike Mandel is the chief economic strategist for the Progressive Policy Institute. He says lower-than-expected GDP in the final three months of last year reflect an economy that's "on the road to recovery," but it's a "slow, uneven recovery."
Mandel says we still haven't solved a key underlying problem: We’re investing too little in increasing our productivity and too much on consumption. According to Mandel, we went into this recession too focused on consuming and neither public or private investment has been enough of a priority. Mandel says, "we still are an over-consuming, under-investing society."
Finally, today's GDP number will be revised two more times before the chapter on the last quarter of 2011 is closed. Mandel says GDP "is an extremely important statistic" and one that you should take "with a grain of salt." The global economy is changing so fast, the statisticians keeping track are having a hard time keeping up. Perhaps proving again, that with so many moving parts, it's harder and harder to get an accurate snapshot of what's really going on in our economy.