Professional Journal Publishes First Academic Article on Gross Output

“For forecasting, the new measure [Gross Output] may be more helpful than the GDP measure, because it provides information of goods in process.”  — David Colander (Middlebury College)

I am happy to announce that the first professional economics journal (Eastern Economic Journal) has published an article on Gross Output, the new macro statistic I’ve been advocating and now has been adopted by the federal government.

GO is an attempt to measure spending at all stages of production, the first statistic to be adopted since GDP was invented in the 1940s.  It is a way of measuring Hayek’s triangle, and I’ve found that the quarterly GO statistic a better, broader measure of the economy and a good predictor of final output (GDP).  In 2014, it has been rising faster than GDP, suggesting that the earlier stages of production are robust and predicting more growth ahead.

I consider the government publishing of a quarterly GO the greatest triumph in supply-side Austrian macroeconomics since Hayek won the Nobel prize 40 years ago.

The commentary is by the respected economist David Colander (Middlebury College), who, despite the headline, is largely positive about GO.  You can read his article here: http://www.palgrave-journals.com/eej/journal/v40/n4/full/eej201439a.html

And my response here: http://www.palgrave-journals.com/eej/journal/vaop/ncurrent/full/eej201465a.html

Austrian economists are now seeking to measure GO (or my own broader Gross Domestic Expenditures) in other countries, such as UK and Argentina.

Econologically yours, AEIOU,

Mark Skousen

US Economic Activity Jumps Sharply in Q2

For Immediate Release
Contact: Valerie Durham, vdurham@skousenpub.com

U. S. ECONOMIC ACTIVITY JUMPS SHARPLY IN 2ND QUARTER 2014

Washington, DC (Friday, November 14, 2014):  Gross Output, a broader measure of U. S. economic activity published by the Bureau of Economic Analysis, advanced to nearly $30.9 trillion in the second quarter of 2014, a 4.8% jump in real terms (annualized).  The GO data released by the BEA can be found at  http://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=51&isuri=1&5114=q&5102=15

Gross Output (GO) is a measure of sales or receipts of all industries throughout the production process, including business to business transactions. 

GO advanced slightly faster than GDP.  Gross Domestic Product (GDP), which measures the value of final goods and services only, rose 4.6% in real terms to $17,328.2 billion in the second quarter. 

“The GO data demonstrates that the economy recovered sharply from the slowdown in the first quarter,” stated Mark Skousen, editor of Forecasts & Strategies, who champions Gross Output as a more comprehensive measure of economic activity.   He first introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990).  Now the BEA publishes GO on a quarterly basis in its “GDP by Industry” data.  [Read more…]

Missing Link in Economics Revealed!

by Mark Skousen
Presidential Fellow, Chapman University

For centuries economists have been searching for the missing link that would tie microeconomics (theory of the firm and individual behavior) with macroeconomics (theory of the economy as a whole).

I believe my four-stage model of the economy does just that.  Based on Austrian macroeconomics (known as Hayek’s triangles), I created a four-stage model of the macro economy in my book, The Structure of Production (NYU Press, 1990).  A few years later, John Taylor of Stanford University (famous for his Taylor Rule) independently produced a 4-stage micro model involving four stages in the production of Caribou Coffee.

A eureka moment!

I’ve incorporated both 4-stage micro and macro models in my textbook, Economic Logic (Capital Press, 2014), now in its 4th edition.  See especially chapter 14:  <http://www.amazon.com/Economic-Logic-Fourth-Edition-Skousen/dp/1621572226 It’s available in book print and Kindle.  If you want to buy it at a discount for only $34.95 plus S&H, call Eagle Publishing at 1-800-211-7661, and use code ECONL6.

SKOUSEN – TAYLOR LINK MACRO WITH MICRO

Figure 1.  Universal 4-stage Macro Model of the Economy

Source:  Mark Skousen, The Structure of Production (New York University Press, 1990); Economic Logic (Capital Press, 2014).

 

 

 

 

 

Figure 2.  4-stage micro model (production process of Caribou Coffee) 

Source:  John B. Taylor, Economics, 5th edition (Boston:  Houghton Mifflin, 2006)

U.S. Economy Doing Better Than Expected

U. S. ECONOMIC ACTIVITY HOLDS STEADY IN 1ST QUARTER 2014

Washington, DC —  Gross Output, a broader measure of  U. S. economic activity published by the Bureau of Economic Analysis, held steady at $30,210.6 billion in the first quarter of 2014.

“The GO data demonstrates that the economy is not as bad off as GDP figures initially suggested,” stated Mark Skousen, editor of Forecasts & Strategies and a Presidential Fellow at Chapman University, who champions Gross Output as a more comprehensive measure of economic activity.   He introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990).  Now the BEA publishes GO on a quarterly basis in its “GDP by Industry” data.

The GO data was released by the BEA on Friday, July 25, 2014:  http://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=51&isuri=1&5114=q&5102=15 [Read more…]