Comments on: GDP made simple… http://welkerswikinomics.com/blog/2008/10/26/gdp-made-simple/ for students and teachers of Economics Wed, 08 Feb 2012 17:23:48 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Kaiser Matin http://welkerswikinomics.com/blog/2008/10/26/gdp-made-simple/comment-page-1/#comment-7369 Kaiser Matin Sat, 14 Feb 2009 11:41:05 +0000 http://welkerswikinomics.com/blog/?p=595#comment-7369 Hi, I am from Sycamore, IL. First, I would like to applaud all of you for your efforts in teaching. BTW, this wiki method is a good way to learn about economics. I have one comment about GDP: Are improvements in quality of life can be accounted in GDP calculation? Hi, I am from Sycamore, IL. First, I would like to applaud all of you for your efforts in teaching. BTW, this wiki method is a good way to learn about economics.

I have one comment about GDP:

Are improvements in quality of life can be accounted in GDP calculation?

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]]> By: Steve Latter http://welkerswikinomics.com/blog/2008/10/26/gdp-made-simple/comment-page-1/#comment-6437 Steve Latter Wed, 29 Oct 2008 16:40:11 +0000 http://welkerswikinomics.com/blog/?p=595#comment-6437 Hello again Mr. Kleman, Thanks again for your interest in the blog and econ! The U.S. Government reports that "median household real income" is currently at $50,233 as of 12/31/07 which is 1.3% higher than 2006 but essentially the same as it was in 1999. "Median" means it is in the middle so it is not an average. Thus, half of households are earning more than $50K and half are earning less. The word "real" means that is restated for inflation so that the comparison is meaningful and represents real purchasing power. The government does not say so directly but I would estimate that approximately 75% of working Americans have the same level of purchasing power (real wages or income) that they did 9 years ago (1999). Since the Government reports that "total Income" is up 17.4% (real GDP) over that same time period, it implies that 25% of the population is enjoying approximately an average real income increase of approximately 6%. This would weight-out to approximately the total reported gain. Is it a good thing that U.S. median household income is stagnant. Well, I would rather see it grow, but globalization has put more pressure on those that are less educated since there is more competition among those type of wage earners. This is good for America as it will stretch us and help us find better ways to improve our education. The answer is NOT to stifle trade and competition, it is to allocate more dollars to changing the culture and opportunity of educational pursuit for the middle class and poor. Hello again Mr. Kleman,

Thanks again for your interest in the blog and econ!

The U.S. Government reports that "median household real income" is currently at $50,233 as of 12/31/07 which is 1.3% higher than 2006 but essentially the same as it was in 1999.

"Median" means it is in the middle so it is not an average. Thus, half of households are earning more than $50K and half are earning less. The word "real" means that is restated for inflation so that the comparison is meaningful and represents real purchasing power.

The government does not say so directly but I would estimate that approximately 75% of working Americans have the same level of purchasing power (real wages or income) that they did 9 years ago (1999). Since the Government reports that "total Income" is up 17.4% (real GDP) over that same time period, it implies that 25% of the population is enjoying approximately an average real income increase of approximately 6%. This would weight-out to approximately the total reported gain.

Is it a good thing that U.S. median household income is stagnant. Well, I would rather see it grow, but globalization has put more pressure on those that are less educated since there is more competition among those type of wage earners. This is good for America as it will stretch us and help us find better ways to improve our education. The answer is NOT to stifle trade and competition, it is to allocate more dollars to changing the culture and opportunity of educational pursuit for the middle class and poor.

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]]> By: R Kleman http://welkerswikinomics.com/blog/2008/10/26/gdp-made-simple/comment-page-1/#comment-6432 R Kleman Wed, 29 Oct 2008 03:41:18 +0000 http://welkerswikinomics.com/blog/?p=595#comment-6432 In the 4th paragraph you state that income has been going down for the middle class and lower wage earners. Can you give us a percentage of the work force that would be considered middle and lower and is this a concern as far as the economy is concerned? In the 4th paragraph you state that income has been going down for the middle class and lower wage earners. Can you give us a percentage of the work force that would be considered middle and lower and is this a concern as far as the economy is concerned?

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]]> By: Steve Latter http://welkerswikinomics.com/blog/2008/10/26/gdp-made-simple/comment-page-1/#comment-6410 Steve Latter Tue, 28 Oct 2008 02:59:46 +0000 http://welkerswikinomics.com/blog/?p=595#comment-6410 Hello R Kleman, I can clarify than real income and real GDP are one in the same! It has nothing to do with jobs! Real GDP and Real Income are synonomous! Income includes wages, profits, rents, and interest. And yes, wages of the average American and houdehold have risen, despite what you read. Real GDP and Real Income are the same. That is why I wrote the blog. Most in the press are acting like income has been going down for years. For the middle income and lower wage earners they have been which gets the press focus, but for the entrepreneurs, college educated, and corporate owners wages/profits have been going up. Net, the average American's real income is up considerably, but "average" includes a broad swath of people. These are not opinion, they are facts, unless of course you do not trust the official U.S. Government statistics. Hello R Kleman,

I can clarify than real income and real GDP are one in the same! It has nothing to do with jobs!

Real GDP and Real Income are synonomous! Income includes wages, profits, rents, and interest. And yes, wages of the average American and houdehold have risen, despite what you read. Real GDP and Real Income are the same.

That is why I wrote the blog.

Most in the press are acting like income has been going down for years. For the middle income and lower wage earners they have been which gets the press focus, but for the entrepreneurs, college educated, and corporate owners wages/profits have been going up.

Net, the average American's real income is up considerably, but "average" includes a broad swath of people. These are not opinion, they are facts, unless of course you do not trust the official U.S. Government statistics.

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]]> By: R Kleman http://welkerswikinomics.com/blog/2008/10/26/gdp-made-simple/comment-page-1/#comment-6407 R Kleman Tue, 28 Oct 2008 00:55:26 +0000 http://welkerswikinomics.com/blog/?p=595#comment-6407 Please clarify that income growth does not mean that wages are going up. It means that more jobs are likely being created. Thank-you Please clarify that income growth does not mean that wages are going up. It means that more jobs are likely being created. Thank-you

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