News Is the US GDP an accurate representation of the country's economic health?

[Polly]

Sure, if the national debt was 230% of GDP. According to the Congressional Budget Office, it was 36.5% in 2004.
Our real problem right now is the budget deficit, which has gone (you can see on the same table) from a $128 billion surplus in 2001 to a $412 billion deficit in 2004. A $540 billion swing in three years is an awful lot. Granted, with an $11.5 trillion GDP, that number looks worse than it really is, but government spending clearly needs to be reigned in.

Oh boy, just when I thought I could bluff my way through without attracting any attention... . 230% is a mental note I had of the situation made earlier on. As I have lost track of the supporting evidence now so I went off digging other sources. According to http://mwhodges.home.att.net/nat-debt/debt-nat.htm" , the TOTAL US debt stood at 40 TRILLION last year, that's 347% of this year's GDP or annual revenue in my example.

 

[Polly]

Nice start, really bad finish. If your doomsday scenario occurs, will not the economy of other nations be even more negatively affected than that of the US?
What would be the effect on France’s economy, or on the economy of any other nation including China?

We will be all affected to varying degree no doubt, depending on whether we have done enough to offset the effect. If I appeared to suggest that the Chinese arranged the scheme by calculating design, it was not my intention and my applogies. The very smart Japanese was the trailblazers, the Chinese merely followed suit.

 

[loseyourname]

Oh boy, just when I thought I could bluff my way through without attracting any attention... . 230% is a mental note I had of the situation made earlier on. As I have lost track of the supporting evidence now so I went off digging other sources. According to http://mwhodges.home.att.net/nat-debt/debt-nat.htm" , the TOTAL US debt stood at 40 TRILLION last year, that's 347% of this year's GDP or annual revenue in my example.

Oh come on, Polly, you should know that the total debt doesn't mean a whole lot by itself. The number from the CBO is the public debt, money that the government itself owes, whereas your number (I'm sure know, but to clarify for anyone that does not) is the total debt of all businesses, all households, and the government combined. The problem with using this number as a doomsday prediction is that most of this debt is simply going around in circles. Households owe money to businesses, which in turn owe money to individuals (venture capitalists), other businesses (banks), and the government (fed banks and bonds). The government itself owes a lot of its money to individuals (bonds) and to businesses (private banks). If we're simply going to take the total debt, then we need to distinguish between money the US as whole owes to itself, and money it owes to others (minus what those others owe the US) to get an accurate picture of how much of a problem this actually is.

Just with respect to individual debt, consider the inflation of that number due to people owing mortgage payments. My parents, for instance, still owe well over $100K, which is well in excess of the household income, but that is owed over the course of the next fifteen years, and the number is far less than the income for the household projected over those fifteen years.

You'll notice http://www.publicdebt.treas.gov/opd/opdpdodt.htm that, even in the case of the public debt, half of it is simply one government agency being in debt to another.

Unfortunately, I cannot find anything on the total debt of all countries, but I did find this, which indicates Indonesia as being the only country whose external debt was in excess of its GNP, as of 1999. I haven't been able to find a more current version of this.

 

[edward]

Are you offering that as an opinion or as a fact? Why can’t we “keep up the present rate of personel consumption”? What dire consequences await us?

Personel bankruptsy for one.

A great amount of personel consumption is being done on credit. Those little plastic cards have individuals more in debt than ever before in history.

What people consume on credit makes the GDP look better than it actually is.
Another example is the amount Americans spend on medical care. As of 2002 a whopping 14.6 % of our GDP is accredited to what was spent on medical care.

Comparing our GDP to that of many other countries is oranges and apples due to the fact that we spend more on credit and we spend a lot more on medical care. Even the cost of fighting forest fires is added to the GDP.

We ave a lot of "product" that really isn't product.