How to measure an economy
Dollar bill with tape measure
David Brancaccio: My favorite New York bureau chief, Marketplace's Heidi Moore joins us before we go. Heidi, you holding up given market conditions?
Heidi Moore:Yes, just like everybody else I'm living on coffee and hope, but, it's going OK.
Brancaccio: You know, you sent a memo to your colleagues in Los Angeles this week with a very Heidi headline, I have to say. Let me quote it, "A consumer recovery, we don't have one, but who needs it anyway?" Sounds like you're seeing the theme of this program that we've just been doing everywhere you look!
Moore: It is everywhere that we look. Where is the consumer in this recovery? We keep hearing about companies that are doing really well and have hordes of cash, more than they know what to do with. The banks are doing pretty well. Things are kinda motoring along. The stock market for the most part is having a great year, except for the last three weeks. And yet, you look around you when you're a consumer and what do you see? You're paying a lot for gas, you're paying more at the supermarket, your credit card bills keep increasing and a lot of your neighbors are unemployed. And so we have this completely divided society that makes no sense. And yet, there are a lot of people making money still and it's only now that we're guessing that we may enter another recession. How nuts is that? Everyone feels like the first recession never ended.
Brancaccio: In fact, there's some gauges of this. I remember when I was just a lad back in the 70s, everybody was paying attention to the Misery Index, especially during those highly inflationary times. You found another distress index. What is it?
Moore: Yeah, the Credability Consumer Distress Index. Good times, right? So, you need an index, obviously, to tell you how bad things are in case you can't look out your window. And this particular index measures on a scale of one to 100, how deeply within the fetal position we are in as consumers. Right now, we're in the mid-60s, which is not good. That does indicate distress.
But the upside all of that is, because things have been so rough for so long, apparently Americans are getting a little better at managing their budgets, if they have budgets. So, there's always a silver lining, at least we're thinking more carefully about the value of a dollar, even if the value of a dollar is plummeting.
Brancaccio: A perfect restatement of the paradox of this program that we've been examining. Then we get to this idea of measuring the health of our economy by how much we all spend, how much we buy -- that being the great yardstick of our wonderfulness.
Moore: That's right. If you're not buying, you're just not American. But some people object to that, surprisingly. One of them, one of the smartest people I know, is Mike Mandel. He's an economist at the Progressive Policy Institute. And he has been against this measure of consumption as something that measures our health for a long time. So I called him up and I asked him what he's thinking about at these days. Here's what he said:
Mike Mandel: I'd like to see consumption knocked off as this great moral good. It is not true Americans have to consume in order for the economy to function. It just doesn't work that way. Is that really what kind of life we want to live? Do we want to think of ourselves as consumers? Or do we want to think of ourselves as producers?
Brancaccio: It's really parallel, Heidi, to this whole notion that I've been doing a lot of coverage on, about is the GDP the great measure of all that is wonderful? Maybe we should measure what brings us well-being, what makes use happy even.
Moore: Yes, exactly. And a lot of other countries have been experimenting with that. England has been looking at a well-being index. And why wouldn't we try that? Because the weird thing about GDP is that the things that contribute to the economy may not be the things that contribute to our own feeling of doing well.
So for instance, divorces and death are contributors to GDP, 'cause you have to pay lawyers, the morticians. But obviously, divorces and death are things that bring us back a little bit as people. I mean, the same that it takes for people a long time to get over unemployment, those are things that prevent people from being fully productive for a while. And yet, they boost GDP. So, maybe this is a good time to start questioning our premises, as long as we're rebuilding.
Brancaccio: Can measuring something else. All right, Marketplace's New York bureau chief Heidi Moore, thank you so much.
Moore: Thank you David.
Brancaccio: By the way, I got your other memo about keeping the bureau's kitchen clean.
Moore: Yeah, it was getting pretty gross.
Brancaccio: It wasn't me...
Moore: Yeah, it's never anybody.