Why we still use GDP to measure economic growth

When it comes to measuring whether an economy is growing, Gross Domestic Product (GDP) is basically the gold standard.

“It leaves some things out, but it is a very good gauge of the health of an economy, if it's growing, if it's becoming more productive,” said Allison Schrager, senior fellow at the Manhattan Institute. “And you know because it includes so many things, it's probably the most complete incomplete economic statistic we have.”

In the U.S., GDP is measured and released by the Bureau of Economic Analysis, who define GDP as “value of the final goods and services produced in the United States.” The measurement is widely used around the world, but it has also garnered plenty of critics. Early this year, a commission from the United Nations published a report looking at alternatives.

But for now, Schrager still prefers GDP.

“Every economy — every culture — puts values on different things,” she said. “But what we need is something we can compare across all these different countries.”

Schrager wrote a defense of GDP for Bloomberg Opinion. “Marketplace” host Kai Ryssdal spoke to her about the column.

To listen to their conversation, use the media player above.