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Fourth Quarter Gross Output Confirms Stagflation for 2022, But No Recession

June 30, 2022 By Ned Piplovic Leave a Comment

Gross OutputWashington, DC (Wednesday, June 29, 2022): Today, the federal government released gross output (GO) – the measure of total spending in the economy – for the 1st quarter 2022. Real GO rose 2.0% (after inflation).

Surprisingly, GO was positive while GDP was negative (in real terms), signifying that the economic conditions in the US are not as bad as many predicted.  Whenever GO rises faster than GDP, it suggests that the economy is doing better.  

The increase in nominal and real GO does not suggest a robust recovery, however. The increase in GO marks the fourth quarter in decline, equal to the average tepid growth rate over the five years prior to the economic downturn in 2022.

In addition to returning to its “normal” range, the Gross Output growth rate was higher than the real GDP, which contracted 1.6% in the first period 2022. Furthermore, after trailing the GO growth rate over the past couple periods, the Adjusted Gross Output (GO*) expanded 3.9%, which is the prevailing historical trend.

in the previous fourth-quarter 2021 GO expanded at a lower rate than GDP, which generally indicate a negative GDP outlook for the following quarter’s GDP. Indeed, real GDP for the 1st quarter fell by 1.6% on an annualized basis. 

The GO growth rate for Q1 2022 indicates a positive GDP outlook for the second quarter, and we should expect a positive GDP growth when the Bureau of Economic Analysis (BEA) releases its second quarter 2022 advance GDP estimates on July 28.

One atypical factor in our model is the impact of pandemic-related issues, such as higher interest rates, price inflation, and continued supply-chain shortages. All these factors could skew the results.

However, business-to-business (B2B) spending continues to outpace consumer spending, which is a good indicator that the business sector has a high level of confidence that the economy will most likely deliver a decent recovery in place of the previously-projected severe recession. As indicated by the graph in the “Business – Not Consumers – Drives the Economy”, B2B spending is expanding at a faster rate than consumption, which is positive indicator for the future. 

Most economists use only GDP and disregard GO when gauging economic outlook. However, Gross Output (GO) is the top line in national income accounting; GDP is the bottom line. Both metrics are essential to understanding where the economy is headed.

As Dale Jorgenson, Steve Landefeld, and William Nordhaus conclude in their book, A New Architecture for the U. S. National Accounts, “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”

Steve Forbes puts it another way: GDP is the X-ray of the economy; GO is the CAT-scan. 

In nominal terms, first-quarter 2022 GDP rose 6.4% and GO grew 12.0%. The Adjusted Gross Output (GO*) – which includes the gross wholesale and gross retail figures (included only as net figures in the GO reported by the BEA) advanced 13.9% in the first period 2022. The difference between net and gross figures amounts to almost $11 trillion, which is missing from the government’s official GO figure, but we include it in our Adjusted GO measure.

With the exception of fourth quarter 2021 when consumer spending outpaced business spending, consumer spending has trailed business spending expansion in five out of the last six periods, which includes the first quarter 2022. This is a positive early indication that, after contracting in the first quarter 2022, GDP should return to expanding, albeit at rates that are slightly lower than historical trends on the account of economic headwinds from higher interest rates, increased prices and persistent obstacles in the global supply chain.

 

Business – Not Consumers – Drives the Economy

Contrary to views of many academic economists and wide-spread media reports, consumer spending does not drive the economy, and does not represent two-thirds of the economy. Using GO as a better and a more accurate measure of total spending in the economy, the business sector (B2B spending) is almost twice the size of consumer spending. Consumer spending is the effect, not the cause, of prosperity (Say’s law).

Therefore, our business-to-business (B2B) index is very useful for assessing the economy’s underlying health and the readiness to rebound after economic downturns.

Gross Output

The B2B Index measures all the business spending in the supply chain and new private capital investment. In the first quarter 2022, B2B activity rose 19.85% on an annualized basis to nearly $39 trillion in nominal terms. This growth is significantly faster than consumer spending expansion, which increased 8.7% to $16.7 trillion in the first quarter. However, the discrepancy is really revealing in real terms. While real B2B activity expanded 11.6% to $26.6 trillion, real consumer spending contracted 1.2% from $13.53 in Q4 2021 to $13.49 trillion in Q1 2022.

“B2B spending is in fact a pretty good indicator of where the economy is headed, since it is more responsive to the boom-bust economic cycle than consumer spending,” stated Skousen. “Business spending continues to expand at a faster pace than consumer spending, which is one good indicator for the longer-term economic outlook.”

While GDP includes only a small portion of investment spending, Gross Output accounts for significantly more of the business investment outlays, which tend to indicate economic direction over extended periods. As David Ranson, chief economist for the private forecasting firm HCWE & Co., states, “Movements in gross output serve as a leading indicator of movements in GDP.”

The federal government will release the advance estimate for second-quarter 2022 GDP on July 28, 2022. The full release of Gross Output data and the third estimate of GDP are scheduled for September 29, 2022.  

Important Note:  We are hopeful that in the near future, the BEA will release GO at the same time as the first estimate of GDP for the quarter, not the third estimate. 

 

Report on Various Sectors of the Economy

After the general decline in the first two periods of 2020 and a robust recovery following that contraction, most sectors of the economy continued to expand in the first period of 2022.

Following a rapid decline in the first half of 2020 the Mining sector followed a 43% annualized growth in Q4 2021 with another expansion of 40% in Q1 2022. The growth was distributed across all three subsectors – Oil and gas extraction; Mining, except oil and gas; and Support activities for mining – which expanded 36.9%, 50.5% and 44.9%, respectively. While the mining sector comprises only a 1.5% share of the overall economy as measured by Gross Output, the sector represents one of the earliest stages of production. Therefore, we watch the expansion and contraction of the Mining segment as early indicators of what other sectors further down the supply chain might do in subsequent periods.

Another small-share segment in the early stages of production – 1.3% of the overall economy – is the Agriculture sector. After contracting 1.3% in the last period of 2021, the Agriculture sector expanded 36.4% to begin 2022.

After reversing two periods of marginal growth with a 15.6% growth in Q3 2021 and a 17.2% expansion Q4 2021, manufacturing – the second largest segment of the economy with a 15.3% share – increased nearly 18% to start 2022.  Nondurable goods increased 21.9% and Durable goods manufacturing expanded 13.8%. Every manufacturing subsector contributed to the sector’s overall growth with the       Petroleum and coal products expanding the most at 89%.

The Retail and Wholesale trade sectors followed last-period 2021 expansions of 9.6% 14.5%, with even faster growth tares of 25.9% and 13.1%, respectively, in the first period 2022. Additionally, the Construction sector, which accounts for nearly 5% of the economy, followed up a 10% increase in the previous period with a 13.1% expansion in Q1 2022.

Accounting for nearly 20%, Finance, insurance, real estate, rental, and leasing is the largest segment of the economy. After increasing 6% in the previous period, the segment expanded 5% in Q1 2022.  While Insurance carriers and related activities grew at a healthy rate of 16.1%, a 27.3% decline in Securities, commodity contracts, and investments resulted in the minor contraction of Finance and insurance subsegment. However, the Real estate and rental and leasing subsegment, which is more than half of the segment’s transactions, followed a 9.1% expansion last period with a 9.2% expansion and managed to keep the overall segment in the positive.

Since contracting nearly 6% in Q2 2020 amid the economic shutdown, government spending has been expanding at record rates. In the first period 2022, overall government spending expanded 8.2% on an annualized basis. This is the second highest government spending expansion since at least 2005, exceeded only by the 11.8% expansion in the first quarter 2022.

Federal government spending expanded nearly 2% in the first period of 2022. While National defense spending declined 0.7%, increased spending on Nondefense spending – up 4.9% – and Government enterprises items – 1.6% higher – drove the overall expansion of government spending.

Despite spending at the federal level expanding less than 2%, government spending at state and local levels expanded nearly 11% and drove overall government spending to expand more than 8% in the first period of 2022.

Gross Output

Gross output (GO) and GDP are complementary statistics in national income accounting. GO is an attempt to measure the “make” economy; i.e., total economic activity at all stages of production, similar to the “top line” (revenues/sales) of a financial accounting statement. In April 2014, the BEA began to measure GO on a quarterly basis along with GDP.

Gross domestic product (GDP) is an attempt to measure the “use” economy, i.e., the value of finished goods and services ready to be used by consumers, business and government. GDP is not quite the same as the “bottom line” (profit, or net income) of an accounting statement, but rather the “value added” or the value of final use. 

GO tends to be more sensitive to the business cycle, and more volatile, than GDP.

 

About GO and B2B Index

Skousen champions Gross Output as a more comprehensive measure of economic activity. “GDP leaves out the supply chain and business to business transactions in the production of intermediate inputs,” he notes. “That’s a big part of the economy, bigger than GDP itself. GO includes B2B activity that is vital to the production process. No one should ignore what is going on in the supply chain of the economy.”

Skousen first introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990). A new third edition was published in late 2015 and is now available on Amazon.

Click here: Structure of Production on Amazon

The BEA’s decision in 2014 to publish GO on a quarterly basis in its “GDP by Industry” data is a major achievement in national income accounting. GO is the first output statistic to be published on a quarterly basis since GDP was invented in the 1940s.

The BEA now defines GDP in terms of GO. GDP is defined as “the value of the goods and services produced by the nation’s economy [GO] less the value of the goods and services used up in production (Intermediate Inputs or II].” See definitions at https://www.bea.gov/newsreleases/industry/gdpindustry/gdpindnewsrelease.htm

With GO and GDP being produced on a timely basis, the federal government now offers a complete system of accounts. As Dale Jorgenson, Steve Landefeld, and William Nordhaus conclude in their book, A New Architecture for the U. S. National Accounts, “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”

Skousen adds, “Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and the business cycle, and demonstrates that business spending is more significant than consumer spending,” he says. “By using GO data, we see that consumer spending is actually only about a third of economic activity, not two-thirds that is often reported by the media. As the chart above demonstrates, business spending is in fact almost twice the size of consumer spending in the US economy.”

 

For More Information

NEW!  Emma Rothschild, “Where is Capital?” in Capitalism: A Journal of History and Economics 2:2 (Summer 2021), pp. 291-371.  https://muse.jhu.edu/article/798746   “Essentially an attempt to apply ideas about gross output to the economic history of the industrial revolution.”  

GO-Day podcast discussion panel hosted Mark Skousen that included Steve Forbes, Sean Flynn, Steve Hanke, and David Ranson, September 30, 2020: https://chapman.zoom.us/rec/share/KJ17YjuR_6zthmgOA5fNprv2e65F-jICOsf430bJvnu8qWzdPYPfTohPC48qRLe9.Q8rmnlXynnTN74Tv?startTime=1601488807000

Steve Forbes: What’s Ahead podcast. In this podcast, Steve Forbes discusses Gross Output with Mark Skousen on September 9, 2019:  https://www.forbes.com/sites/steveforbes/2019/09/09/were-using-the-wrong-measure-gdp-to-gauge-the-economys-real-health-mark-skousen/#35ff3d9a52fa

GO-Day podcast discussion panel hosted Mark Skousen that included Steve Forbes, Sean Flynn, Steve Hanke, and David Ranson, September 30, 2020: https://chapman.zoom.us/rec/share/KJ17YjuR_6zthmgOA5fNprv2e65F-jICOsf430bJvnu8qWzdPYPfTohPC48qRLe9.Q8rmnlXynnTN74Tv?startTime=1601488807000

The GO data released by the BEA can be found at www.bea.gov under “Quarterly GDP by Industry.” Click on interactive tables “GDP by Industry” and go to “Gross Output by Industry.” Or go to this link directly: http://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=3&isuri=1&5102=15

For more information on Gross Output (GO), the Skousen B2B Index, and their relationship to GDP, see the following:

Mark Skousen, “If GDP Lags, Watch the Economy Grow,” Wall Street Journal, April 24, 2018:  https://www.grossoutput.com/2018/04/26/away-go-economy-growing-faster-expected/

Mark Skousen, “At Last, a Better Way to Economic Measure” lead editorial, Wall Street Journal, April 23, 2014: http://on.wsj.com/PsdoLM

Steve Forbes, Forbes Magazine (April 14, 2014): “New, Revolutionary Way To Measure The Economy Is Coming — Believe Me, This Is A Big Deal”: http://www.forbes.com/sites/steveforbes/2014/03/26/this-may-save-the-economoy-from-keynesians-and-spend-happy-pols/

Mark Skousen, Forbes Magazine (December 16, 2013): “Beyond GDP: Get Ready For A New Way To Measure The Economy”: http://www.forbes.com/sites/realspin/2013/11/29/beyond-gdp-get-ready-for-a-new-way-to-measure-the-economy/

Steve Hanke, Globe Asia (July 2014): “GO: J. M. Keynes Versus J.-B. Say,” http://www.cato.org/publications/commentary/go-jm-keynes-versus-j-b-say

David Ranson, “Output growth data that the economy generates months earlier than GDP,” Economy Watch, July 24, 2017. HCWE & Co. http://www.hcwe.com/guest/EW-0717.pdf

Mark Skousen, “Linking Austrian Economics to Keynesian Economics,” Journal of Private Enterprise, Winter, 2015: http://journal.apee.org/index.php?title=Parte7_Journal_of_Private_Enterprise_vol_30_no_4.pdf

To interview Dr. Mark Skousen on this press release, contact him at [email protected], or Ned Piplovic, Media Relations at [email protected]

# # #

________________________________________

[1] The BEA currently uses a limited measure of total sales of goods and services in the production process. Once products are fabricated and packaged at the manufacturing stage, the BEA’s GO only adds “net” sales at the wholesale and retail level. Its official GO for the 2022 first quarter is $44.23 trillion. By including gross sales at the wholesale and retail level, the Adjusted GO (GO*) expands to more than $55 trillion in Q1 2022. Thus, the BEA omits more nearly $11 trillion in business-to-business (B2B) transactions in its GO statistics. We include them as a legitimate economic activity that should be accounted for in GO, which we call Adjusted GO. See the new introduction to Mark Skousen, The Structure of Production, 3rd ed. (New York University Press, 2015), pp. xv-xvi.

Filed Under: Articles, Featured Post, Main Tagged With: Economy, GO, Gross Output, Mark Skousen

FreedomFest Agenda – Here’s a preview:

June 7, 2022 By Mark Skousen Leave a Comment

FreedomFest

Dear friends of FreedomFest,

The excitement is building for our July 13-16 intellectual feast at the Mirage in Las Vegas. The complete agenda with 250 speakers will be posted in a few days at www.freedomfest.com, but here are a few sessions that might interest you.

Wednesday, July 13

Wednesday, July 13, 1:00-1:50 p.m. Jim Woods, co-editor of Fast Money Alert, on “My Favorite Technique to Make Money,” followed by a discussion with the legendary Jim Rogers on “Which Offers a Better Investment Opportunity, the USA or Emerging Markets?” Moderated by Roger Michalski.

Wednesday, July 13, 1:00-1:50 p.m. My first session, “Who’s Winning the Battle of Ideas: Marx, Keynes or Adam Smith?” An update on my new 4th ed. of “The Making of Modern Economics.”

Wednesday, 2:00-2:25 p.m. Alex Green (Oxford Club) on “Creating a Permanent Portfolio: Can You Beat the Market Without Trading?”

Wednesday, 2:25-2:50 p.m. My big debate with technical trader Mike Turner: “Buy and Hold vs Market Timing: Which is the Most Profitable Investment Strategy During a Bear Market?”

Wednesday, 3-3:50 p.m. “Is Your Boss Ruthless or Compassionate? How the New Model of Capitalism Can Defeat Socialism and Marxism.” The evolution of business, from robber barons to compassionate capitalists: Andrew Carnegie and the Homestead Strike of 1892; Henry Ford’s $5-a day in 1914; Jack Welch’s case of Ruthless Capitalism 1981-2001; and John Mackey’s “Conscious Capitalism” in 2014.

On the evening of July 13, we have our “Opening Ceremonies,” with Lisa Kennedy, host of Fox Business, as our Mistress of Ceremonies all four days. Keynotes include Steve Forbes on his new book, “Inflation and How to Fix it,” Connor Boyack on “How CNN’s Attack on The Tuttle Twins Backfired and Helped Sell 100,000 Books to Teach Kids About Freedom,” and Dog the Bounty Hunter (new!) on “What Being Cancelled Taught Me.” Followed by the opening cocktail party in our exhibit hall, “the trade show for liberty,” with 180 exhibitors; plus Peter Studabaker will perform as our fun libertarian magician.

Thursday, July 14

We start off the morning with our annual “Global Economic Summit” with Barbara Kolm (Europe and Russia), Steve Moore (North America), Jim Rogers and Preity Umpala (China, India and Middle East); and Roberto Salinas (Latin America). We cover the hot spots!

It will be followed by the big debate: “Ben Stein vs Art Laffer: Should We Raise Taxes on the Rich?” Ben Stein will also be our luncheon speaker: “Rich & Famous: My Life in Beverly Hills & Hollywood.”

Thursday, 3:10-3:35 p.m. “The Cloud Revolution: Will It Create a New Roaring Twenties?” with Mark P. Mills (Manhattan Institute), George Gilder and Steve Forbes (moderator).

Thursday, 3:35-4:00 p.m. My interview with California money manager David Bahnsen, “How to Fight the Free Lunch Movement.” (new)

Thursday 4:30-5:45 p.m. “Drug Legalization on Trial,” with Wayne Allyn Root as Judge; Alex Datig and Catherine Bernard attorneys, and star witnesses Judge Jim Gray, Avens O’Brien and Luke Niforatos.

Thursday, 5:45-6:45 p.m. The God Debate! Michael Shermer (Skeptic magazine) takes on Eric Metaxas and his new book “Is Atheism Dead?,” moderated by Alex Green. I can’t wait.

Thursday, 6:45-7:00 p.m. Betsy Devos, former Secretary of Education, on “Hostages No More: The Fight for Education Freedom and the Future of the American Child.”

Friday, July 15

Friday, 7:30-8:45 a.m. Breakfast with Mark Skousen and Steve Forbes: “The Future of American Exceptionalism and the China Threat: What Will it Take to Remain the #1 Superpower?”

Friday, 11:30 a.m.-12:00 noon. My interview with Senator Rand Paul: “The Inside Scoop: A Conversation with Senator Rand Paul Confronting Government Officials on Capitol Hill.” A luncheon with Senator Paul follows.

Friday 3:10-4:00 p.m. “The Ultimate Bitcoin Debate: Is Crypto the biggest Ponzi scheme since the dot.com era?” John Mackey and Alex Green (yes) vs Max Borders and Brian Robertson (no).

Friday, 5:30-6:30 p.m. British comedian and producer John Cleese, “What’s So Funny? Tips for Success in Education, Business and Relationships.” Followed by an interview by Reason editor Nick Gillespie,and VIP reception with John Cleese.

Saturday, July 16

Saturday, 9-9:30 a.m. Senator Mike Lee and Free the People panel

Saturday 9:30-10:00 a.m. Andrew Yang (Forward Party) vs Larry Sharpe (Libertarian Party of New York) on “Universal Basic Income: Should Every American Get a $1,000 a Month from the Government?”

Saturday, 11-11:50 am. Big Debate: “Election Chaos: Was the 2020 Election Stolen From Trump and Should 2024 Be His Year?” with Isaac Saul, John Fund, Former Congressman Justin Amash, Wayne Allyn Root; Erick Erickson (moderator). The sparks will fly.

Saturday 2:10-3:00 p.m. The Big Four Panel: Steve Moore, Jim Rogers, Steve Forbes; Mark Skousen

Saturday 4:00-4:50 p.m. “Beyond Wealth: How to Think, Act and Live Like a Renaissance Man” with Jim Woods, Alex Green and Mark Skousen. Nice way to end the conference!

Saturday night gala banquet, 6:00-10:00 p.m. Kennedy as MC; Glenn Beck as the keynote speaker; Anthem Film Awards; Music and dance by the Beach Boys cover band “Good Vibrations.” It is time to celebrate liberty.

Register This Week and Get $50 Off

Hurry, our room block at the Mirage Hotel & Casino is almost full, and the Treasure Island hotel next door is filling up fast.

To register, go to www.freedomfest.com, and use the code EAGLE to get $50 off the registration fee. If you have any questions about FreedomFest, email Hayley at [email protected].

This is Mark Skousen, saying so long, fellow free-marketeers, and remember, AEIOU.
Mark Skousen

FreedomFest

Filed Under: Articles, Featured Post, Main Tagged With: Economy, GO, Gross Output, Mark Skousen

Fourth Quarter Gross Output Confirms Stagflation for 2022, But No Recession

March 30, 2022 By Ned Piplovic Leave a Comment

Washington, DC (Wednesday, March 30, 2022): Today, the federal government released gross output (GO) – the measure of total spending in the economy – for the 4th quarter 2021. Real GO rose 3.8% (after inflation), which was another indication of a slowdown in the economy compared to the 4.4% growth in the previous quarter.

Furthermore, the GO growth rate is now less than real GDP (6.9%).  This is the first time in over a year that quarterly GO grew less than GDP, a clear sign of a slumping economy. It confirms the “GDP Now” forecast of less than 1% growth for the first quarter.

GO is a leading indicator of economic growth (GDP) in subsequent quarters. As David Ranson, chief economist for the private forecasting firm HCWE & Co., states, “Movements in gross output serve as a leading indicator of movements in GDP.” See his summary of GO’s value here:  https://www.youtube.com/watch?v=UbV14VK4QBM

According to our model, whenever quarterly GO grows at a slower pace less than GDP, the outlook for the next quarter’s GDP is downward. If GO outpaces GDP, it means a positive outlook for the next quarter’s GDP. For most of 2021 GO was growing faster than GDP, suggesting a strong recovery. But in the face of higher interest rates, price inflation, and continued supply-chain shortages, the outlook has turned slightly negative. 

More economists are focusing on GO as a way to gauge the direction of the economy.  They recognized gross output (GO) as the top line in national income accounting, and GDP is the bottom line. As Dale Jorgenson, Steve Landefeld, and William Nordhaus note in their book, A New Architecture for US National Accounts, “Both are required in a complete system of accounts.” As Steve Forbes states, “GDP is the X-ray of the economy; GO is the CAT-scan.”

Gross Output

Figures in billions $, except percentages

In nominal terms, fourth-quarter 2021 GDP rose 13.8% and GO grew 11.1%. The Adjusted Gross Output (GO*) – which includes the gross wholesale and gross retail figures (included only as net figures in the GO reported by the BEA) – advanced 11.9% in the last quarter 2021. The difference between net and gross figures amounts to more than $10 trillion, which is missing from the government’s official GO figure.

Business Investment is Doing Better than Consumer Spending

One silver lining suggests that the slowdown will not turn into a full-blown recession:  business-to-business (B2B) spending continues to outpace consumer spending. As the graph below shows, both are growing at a slower pace, but B2B is doing better than consumption. That’s positive for the future.  

Contrary to views of many academic economists and wide-spread media reports, consumer spending does not drive the economy, and does not represent two-thirds of the economy. Using GO as a better and a more accurate measure of total spending in the economy, the business sector (B2B spending) is almost twice the size of consumer spending. Consumer spending is the effect, not the cause, of prosperity (Say’s law).

Therefore, our business-to-business (B2B) index is very useful for assessing the economy’s underlying health and the readiness to rebound after economic downturns. The B2B Index measures all the business spending in the supply chain and new private capital investment. In the fourth quarter 2021, B2B activity rose 13.5% on an annualized basis to $31.32 trillion in nominal terms. This growth is significantly faster than the growth of consumer spending, which increased 8.8% to $16.31 trillion in the fourth quarter. However, the discrepancy is even more pronounced in real terms. While real B2B activity expanded 6.5% to $25.82 trillion, real consumer spending expanded just 1.4% from $13.479 in Q3 to $13.53 trillion in the Q4. 

Gross Output

“B2B spending is in fact a pretty good indicator of where the economy is headed, since it is more responsive to the boom-bust economic cycle than consumer spending,” stated Skousen. “Business spending continues to expand at a faster pace than consumer spending, which is one good indicator for the longer-term economic outlook.”

While GDP includes only a small portion of investment spending, Gross Output accounts for significantly more of the business investment outlays, which tend to indicate economic direction over extended periods.

The federal government will release the advance estimate for first-quarter 2022 GDP on April 28, 2022. The full release of Gross Output data and the third estimate of GDP are scheduled for June 29, 2022.  

Important Note:  We are hopeful that in the near future, the BEA will release GO at the same time as the first estimate of GDP for the quarter, not the third estimate.  A simultaneous release date will be most helpful to economic forecasters. 

Report on Various Sectors of the Economy

After the general decline in the first two periods of 2020 and a robust recovery in the second half of that year, most sectors of the economy continued to expand in 2021.

Following a rapid decline in the first half of 2020, the Mining sector continued its expansion with a 43% annualized growth rate in Q4 2021. This result was driven by the oil and gas extraction sub-segment, which expanded more than 56% over the previous period and which accounts for nearly 65% of the entire Mining sector. While the mining sector comprises only a 1.5% share of the overall economy as measured by GO, the sector represents one of the earliest stages of production. Therefore, we watch the expansion and contraction of the Mining segment as early indicators of what other sectors further down the supply chain might do in subsequent periods.

Following two periods of contracting at less than 2%, Manufacturing – the second largest segment of the economy with a 15.6% share – expanded more than 17% in the fourth quarter. While few of the sub-segments contracted – Computer and electronic products (-11.2%), Furniture and related products (-4.6%) – the Manufacturing segment expanded on the strength of some of its other sub-segments. The Fabricated metal products sub-segment grew 31%, Motor vehicles, bodies and trailers, and parts expanded 29.2%, Nonmetallic mineral products advanced 26.1%, and Electrical equipment, appliances, and components increased 25.3%.

The Retail trade sector expanded 9.6%, and the Wholesale trade grew 14.5%. Additionally, after two consecutive contraction periods the Construction sector, which accounts for nearly 5% of the economy, increased almost 10% in the fourth quarter.

Another small-share segment – 1.3% of the overall economy – in the early stages of production is the Agriculture sector, which has been contracting steadily over the past four quarters. However, the rate of contraction is getting smaller. After contracting 5.7% in Q1, 4.1% in Q2, and 3.6% in Q3 2021, the segment declined only 1.3% in the last period of 2021. Another segment that contracted in the fourth period was Management of companies and enterprises sector (-4.9%).

After contracting in four out of the last five periods, Federal government spending expanded nearly 3% in the last period of 2021. Despite a 1.2% reduction in National defense spending, the overall spending at the federal level increased of expanded spending on Nondefense items and Government enterprises.

While spending at the federal level expanded less than 3%, a 7.6% increase in government spending at state and local levels drove overall government spending to increase 6.1% for the last period of 2021.

Since contracting more than 17% in Q2 2020, government at the State and local levels has been expanding at an average annualized rate of 8.6% over the past six quarters.          

Gross Output

Gross output (GO) and GDP are complementary statistics in national income accounting. GO is an attempt to measure the “make” economy; i.e., total economic activity at all stages of production, similar to the “top line” (revenues/sales) of a financial accounting statement. In April 2014, the BEA began to measure GO on a quarterly basis along with GDP.

Gross domestic product (GDP) is an attempt to measure the “use” economy, i.e., the value of finished goods and services ready to be used by consumers, business and government. GDP is not quite the same as the “bottom line” (profit, or net income) of an accounting statement, but rather the “value added” or the value of final use. 

GO tends to be more sensitive to the business cycle, and more volatile, than GDP.

About GO and B2B Index

Skousen champions Gross Output as a more comprehensive measure of economic activity. “GDP leaves out the supply chain and business to business transactions in the production of intermediate inputs,” he notes. “That’s a big part of the economy, bigger than GDP itself. GO includes B2B activity that is vital to the production process. No one should ignore what is going on in the supply chain of the economy.”

Skousen first introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990). A new third edition was published in late 2015 and is now available on Amazon.

Click here: Structure of Production on Amazon

The BEA’s decision in 2014 to publish GO on a quarterly basis in its “GDP by Industry” data is a major achievement in national income accounting. GO is the first output statistic to be published on a quarterly basis since GDP was invented in the 1940s.

The BEA now defines GDP in terms of GO. GDP is defined as “the value of the goods and services produced by the nation’s economy [GO] less the value of the goods and services used up in production (Intermediate Inputs or II].” See definitions at https://www.bea.gov/newsreleases/industry/gdpindustry/gdpindnewsrelease.htm

With GO and GDP being produced on a timely basis, the federal government now offers a complete system of accounts. As Dale Jorgenson, Steve Landefeld, and William Nordhaus conclude in their book, A New Architecture for the U. S. National Accounts, “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”

Skousen adds, “Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and the business cycle, and demonstrates that business spending is more significant than consumer spending,” he says. “By using GO data, we see that consumer spending is actually only about a third of economic activity, not two-thirds that is often reported by the media. As the chart above demonstrates, business spending is in fact almost twice the size of consumer spending in the US economy.”

For More Information

NEW!  Emma Rothschild, “Where is Capital?” in Capitalism: A Journal of History and Economics 2:2 (Summer 2021), pp. 291-371.  https://muse.jhu.edu/article/798746   “Essentially an attempt to apply ideas about gross output to the economic history of the industrial revolution.”  

GO-Day podcast discussion panel hosted Mark Skousen that included Steve Forbes, Sean Flynn, Steve Hanke, and David Ranson, September 30, 2020: https://chapman.zoom.us/rec/share/KJ17YjuR_6zthmgOA5fNprv2e65F-jICOsf430bJvnu8qWzdPYPfTohPC48qRLe9.Q8rmnlXynnTN74Tv?startTime=1601488807000

Steve Forbes: What’s Ahead podcast. In this podcast, Steve Forbes discusses Gross Output with Mark Skousen on September 9, 2019:  https://www.forbes.com/sites/steveforbes/2019/09/09/were-using-the-wrong-measure-gdp-to-gauge-the-economys-real-health-mark-skousen/#35ff3d9a52fa

GO-Day podcast discussion panel hosted Mark Skousen that included Steve Forbes, Sean Flynn, Steve Hanke, and David Ranson, September 30, 2020: https://chapman.zoom.us/rec/share/KJ17YjuR_6zthmgOA5fNprv2e65F-jICOsf430bJvnu8qWzdPYPfTohPC48qRLe9.Q8rmnlXynnTN74Tv?startTime=1601488807000

The GO data released by the BEA can be found at www.bea.gov under “Quarterly GDP by Industry.” Click on interactive tables “GDP by Industry” and go to “Gross Output by Industry.” Or go to this link directly: http://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=3&isuri=1&5102=15

For more information on Gross Output (GO), the Skousen B2B Index, and their relationship to GDP, see the following:

Mark Skousen, “If GDP Lags, Watch the Economy Grow,” Wall Street Journal, April 24, 2018:  https://www.grossoutput.com/2018/04/26/away-go-economy-growing-faster-expected/

Mark Skousen, “At Last, a Better Way to Economic Measure” lead editorial, Wall Street Journal, April 23, 2014: http://on.wsj.com/PsdoLM

Steve Forbes, Forbes Magazine (April 14, 2014): “New, Revolutionary Way To Measure The Economy Is Coming — Believe Me, This Is A Big Deal”: http://www.forbes.com/sites/steveforbes/2014/03/26/this-may-save-the-economoy-from-keynesians-and-spend-happy-pols/

Mark Skousen, Forbes Magazine (December 16, 2013): “Beyond GDP: Get Ready For A New Way To Measure The Economy”: http://www.forbes.com/sites/realspin/2013/11/29/beyond-gdp-get-ready-for-a-new-way-to-measure-the-economy/

Steve Hanke, Globe Asia (July 2014): “GO: J. M. Keynes Versus J.-B. Say,” http://www.cato.org/publications/commentary/go-jm-keynes-versus-j-b-say

David Ranson, “Output growth data that the economy generates months earlier than GDP,” Economy Watch, July 24, 2017. HCWE & Co. http://www.hcwe.com/guest/EW-0717.pdf

Mark Skousen, “Linking Austrian Economics to Keynesian Economics,” Journal of Private Enterprise, Winter, 2015: http://journal.apee.org/index.php?title=Parte7_Journal_of_Private_Enterprise_vol_30_no_4.pdf

To interview Dr. Mark Skousen on this press release, contact him at [email protected], or Ned Piplovic, Media Relations at [email protected]

# # #

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[1] The BEA currently uses a limited measure of total sales of goods and services in the production process. Once products are fabricated and packaged at the manufacturing stage, the BEA’s GO only adds “net” sales at the wholesale and retail level. Its official GO for the 2021 fourth quarter is $43.00 trillion. By including gross sales at the wholesale and retail level, the Adjusted GO (GO*) expands to nearly $53.2 trillion in Q4 2021. Thus, the BEA omits more than $10 trillion in business-to-business (B2B) transactions in its GO statistics. We include them as a legitimate economic activity that should be accounted for in GO, which we call Adjusted GO. See the new introduction to Mark Skousen, The Structure of Production, 3rd ed. (New York University Press, 2015), pp. xv-xvi.

Filed Under: Articles, Featured Post, Main Tagged With: Economy, GO, Gross Output, Mark Skousen

Gary North, R. I. P.

February 28, 2022 By Mark Skousen 1 Comment

A dear friend Gary North (1942-2022) passed away on Thursday, February 24. He was 80 years old. I had been trying to reach him recently without any response, so I wondered if his prostate cancer caught up with him. I really feel sorry I was not able to say good-bye, he being so much of a recluse in the past 20 years.

My last email to him was October 9, 2021, where he said, “You have always been the smooth it over guy. I have been the blowup the parade.” We saw each other for the last time in June 2019.

Gary North

Gary North was one of those people who qualifies as “My Most Unforgettable Characters” that Reader’s Digest used to highlight. He was truly a unique figure in my life. He was the one who called me in the year 2000 and encouraged me to apply for the position of president of the Foundation for Economic Education (FEE), the oldest free-market think tank. It was a life-changing decision to move to New York. Even though I lasted only a year as president of FEE, that decision resulted in my teaching at Columbia University, and then with Jo Ann teaching at Sing Sing through Mercy College, and many other changes in our lives and our children (especially Hayley, who moved up to New York with us).

He is only a handful of people who I could spend hours with and never reach the bottom of his knowledge. We knew each other from the 1970s on. He could talk intelligently about philosophy, religion, investments, economics, politics, and even sports (we went to a Lakers game once and saw Kareem Abdul-Jabbar play.)

Four HorsemenHis hard-money newsletter, Gary North’s Remnant Review, was older than mine by several years. I believe he started his around 1974, when Inflation Survival Letter, got started. We did a lot of conferences together, along with Larry Abraham and Doug Casey.

In the early 1980s, I took over his position as an investment counselor to Howard Ruff’s (Ruff Times) subscribers. Gary spoke at the New Orleans hard-money conference and bought junk silver in the early 1960s. He was one of the original gold bugs. He was also famous for predicting the end of the world in 2000 due to the Y2K crisis.

He worked for a year at Congressman Ron Paul’s office as a research assistant in 1976, and stayed at our home in Falls Church, Virginia, for week when he arrived in DC – always unannounced. Jo Ann did his laundry.

With Hayek and Gary NorthIn 1985, Jo Ann and I, along with our four children, took the “Grand Tour of Europe” with Howard Ruff and Gary North, among others. I arranged an interview with the great Austrian economist Friedrich Hayek at Hayek’s retreat in the Austrian Alps, and invited Gary to come with me (along with John Mauldin, his assistant). Major parts of the 3-hour recording was published in the book “Hayek on Hayek” without attribution. Here is a photo of us.

During the Howard Ruff tour, I was on a panel with Gary and the moderator asked Howard Ruff, R. E. McMaster and me what our sign was. We all gave our zodiac signs. Gary North gave a memorable answer: “The dollar.”

We also were part of a Mises Institute conference in Vienna, Austria, in 1988 with Murray Rothbard, Lew Rockwell, and Burt Blumert. (See photo below.) Gary and I wrote tributes to Murray Rothbard in a Festschrift in 1988.

In the late 1980s, Gary played the FCC lotteries for cell tower licenses in various cities around the United States and won two licenses! He told me that he later sold each one for $1 million, which made him financially independent. He learned a year later that the cell licenses were being resold for $50 million. I didn’t have the heart to tell him that those cell licenses are now worth over $1 billion. Talk about seller’s regrets!

He wrote for many organizations, including FEE (The Freeman) and the Mises Institute, and had his own website www.garynorth.com. He was prolific for sure, writing daily, a marketing genius.

Like my father, Gary’s father was an FBI agent who may have known my uncle Cleon or my father Leroy Skousen, who both worked in the LA office. Gary was born in 1942 and grew up in the Los Angeles area, and got his Ph. D. in economic history at UC Riverside in 1972. He wrote over 50 books and was especially proud of his “Economic Commentary on the Bible,” most of which was self-published through his Institute for Christian Economics. He wrote for The Freeman and other publications. I cite his critique of Karl Marx and quoted his “Fat Book Theory” in my own history, “The Making of Modern Economics,” in which he argued that the most influential works were all fat tomes.

He was a deeply committed Calvinist and devoted student of R. J. Rushdoony, author of “The Institutes of Biblical Law.” He married R. J. Rushdoony’s daughter Sharon and had several children, and moved around a lot in the South and finally resided near Atlanta, Georgia. I remember how he would have two houses – one to live in, and another to house all his books.

Gary was preceded in death by his son Caleb who suffered from a rare illness. He is survived by Sharon, his wife of 50 years, and their other children Darcy North, Scott North and his wife, Angela, and Lori McDurmon and her husband, Joel, and eight grandchildren.

There are people in one’s life that you wish you could talk or write to after they die. Gary North is one of them.

For more information about Gary North’s life, go to https://www.garynorth.com/public/23334.cfm.

 

Filed Under: Articles, Featured Post, Main Tagged With: Economy, GO, Gross Output, Mark Skousen

“The Making of Modern Economics” – The book the New Socialists fear the most

January 17, 2022 By Ned Piplovic Leave a Comment

Good news! The brand-new fourth edition of “The Making of Modern Economics” has just been published by the prestigious publisher Routledge (publisher of the works of Friedrich Hayek).

And it’s available for half off the retail price and shipping! 

Guess who the hero is of my book? See the cover below.

 

Making of Modern Economics

It is now the most popular history textbook of the great economic thinkers used in the classroom. As Roger Garrison, professor at Auburn University, states, “My students love it. Skousen makes the history of economics come alive like no other textbook.”

But it’s not just a book for students and academics. People of all walks of life enjoy reading it. As John Mackey, CEO of Whole Foods Market, says, “Mark’s book is fun to read on every page. I have read it three times. I love this book and have recommended it to dozens of my friends.” 

It’s unique in that you can jump around and read any chapter you want; each chapter stands on its own; and it’s loaded with stories, anecdotes, humorous episodes, pictures and even musical selections for each chapter. 

Winner of Several Awards

The book is award-winning. It has won the Choice Book Award for Academic Excellence, and it was ranked #2 Best Libertarian Books in Economics by the Ayn Rand Institute (behind Henry Hazlitt’s “Economics in One Lesson”). It was the Main Selection of the Boulder Book Club.

If you order directly from me you save half off the publisher’s price and shipping – you pay only $35, and I pay the postage and autograph each copy. To order, go to www.skousenbooks.com.

A Rarely-Told Story of High Drama

First and foremost, the book tells the remarkable untold story of free-market capitalism’s long-running battle against Keynesianism, Marxism, socialism and other isms. It is an account of high drama with a singular heroic figure, Adam Smith and his celebrated “system of natural liberty.” The running plot involves many unexpected twists and turns; sometimes our hero is left for dead, only to be resuscitated by his free-market friends; the story even has a surprise ending.

A Full-Scale Critique of All Major Doctrines

All previous histories tend to give a dry, disjointed, and helter-skelter account of economists and their contradictory theories. But I unify the story of economics by ranking all major economic thinkers either for or against the invisible hand doctrine of Adam Smith. Thus, Marx, Veblen and Keynes are viewed as critics of Smith’s doctrine, while Marshall, Hayek and Friedman are seen as supporters.

Using this ranking system, The Making of Modern Economics offers a full-scale review and critique of every major school and their theories, including classical, Keynesian, monetary, Austrian, institutionalist and Marxist.

A Complete History

Skousen’s history is comprehensive. He makes a point of discussing all schools of economics and not just the ones he agrees with. Too many economists have omitted major characters from the history of economics, a practice bordering on intellectual dishonesty. Robert Heilbroner’s popular book, The Worldly Philosophers, for example, virtually ignores the laissez-faire French, Austrian and Chicago traditions. (His latest edition does not even mention Milton Friedman by name!)

Think of The Making of Modern Economics as a contra-Heilbroner history.

It’s a perfect antidote to all those biased, inaccurate attacks on the free market and its proponents.

The book records the lives and ideas of important economists often ignored in other histories, such as Montesquieu, Ben Franklin, J. B. Say, Frederic Bastiat, Friedrich List, Herbert Spencer, Ludwig von Mises, Knut Wicksell, Philip Wicksteed, Max Weber, Irving Fisher, Roger Babson, Frederick Taylor, A. C. Pigou, Joan Robinson, Paul Sweezy, Paul Samuelson and Murray Rothbard.

My book also restores the vital role of the Austrian and Swedish schools in the marginalist revolution and the development of monetary economics. It emphasizes the impact of other disciplines on economics, such as evolution, sociology, and religion.

“Tell All” Biographies

Skousen’s book brings history alive with exciting new insights into the lives of the great economists through in-depth biographies and the author’s own research, revealing an amazing tale of idle dreamers, academic scribblers, occasional quacks and madmen in authority.

The Making of Modern Economics does its best to entertain, with provocative sidebars, humorous anecdotes, even music selections reflecting the spirit of each major economist. Samples:

Why Adam Smith burned his clothes…and then burned his papers.

The “satanic verses” of the poet Karl Marx.

Were Malthus, Ricardo, Marshall and Keynes anti-female?

The infamous grading technique of Chicago’s Jacob Viner (he regularly flunked a third of his class).

The sexual scandals of Karl Marx, Carl Menger, Joseph Schumpeter and Friedrich Hayek.

The story behind Marx the phrenologist, Jevons the astrologer, Keynes the palm reader, and Friedman the amateur hand-writing analyst.

Which famous economist is buried next to rock star Jim Morrison in Paris?

How Darwin and Wallace discover their theory of evolution after reading Malthus.

Why Malthus and the doomsdayers have been proven wrong about overpopulation and environmental crises.

The strange case of David Ricardo: Why Schumpeter, Keynes, and Samuelson admired him–and deplored him.

Why Malthus refused to have his portrait made until age 67.

Why Hayek blames John Stuart Mill, a hero of classical liberalism, for popularizing socialism among intellectuals in the 19th century.

The real origin of the epithet “dismal science,” and why critics are now calling economics the “imperial” science, with ever-increasing applications in law, finance, history, and politics.

How John Stuart Mill and the disciples of David Ricardo became hostage to the Marxists, and how Carl Menger and the Austrians revived the laissez faire model of Adam Smith from oblivion.

The inside story of three multi-millionaire economists–David Ricardo, Irving Fisher and John Maynard Keynes.

The bizarre story of Jeremy Bentham: from democratic reformist to utilitarian fascist.

The socialist origins of the American Economic Association and the London School of Economics.

Veblen’s incredible prophecies about World War I and II.

Thorstein Veblen versus Max Weber: Who had a better vision of capitalism?

How Irving Fisher became an advisor to the fascist Mussolini.

The little-known story of how the economics establishment in the West (including economists at Cambridge, Harvard and Yale) failed to forecast the 1929-32 economic collapse.

How Austrian economists Ludwig von Mises and Friedrich Hayek were able to predict the 1929-33 crisis, yet failed to convince the world of their theories.

How the 1929 crash served as a catalyst for Keynes’s “general theory.”

How Keynes saved the world from Marxism in the 1930s.

The truth about Keynes’s homosexuality and the rumor that his Cambridge colleague, A. C. Pigou, was a Soviet spy.

Gross Domestic Product (GDP)–how a Keynesian statistic was invented by a Russian.

How Irving Fisher’s misinterpretation of his quantity theory of money led to his losing a fortune on Wall Street, and how Milton Friedman avoided repeating Fisher’s blunder.

Why Friedman and the Chicago school triumphed over Mises and the Austrian school in discrediting Keynesianism and restoring the Adam Smith model of market capitalism.

Fully Illustrated with Over 100 Photos, Portraits and Graphs

Finally, The Making of Modern Economics is the first fully-illustrated history of economics, with over 100 charts, portraits, and photographs, including a picture of….

…Keynes in bed (where he made his millions),

…Eugen Böhm-Bawerk in official regalia as finance minister of Austria,

…Alfred Marshall trying to hide his oversized left hand,

…the preserved body of Jeremy Benthem in London,

…the only known photograph of Irving Fisher smiling (before he lost millions in the stock market), and

…over 75 rare and unusual photos and portraits of famous economists.

Provocative Chapter Titles

Here are the titles of each chapter of The Making of Modern Economics:

  1. It All Started with Adam (Adam Smith, that is)
  2. The French Revolution: Laissez Faire Avance!
  3. The Irreverent Malthus Challenges the New Model of Prosperity
  4. Tricky Ricardo Takes Economics Down a Dangerous Road
  5. Milling Around: John Stuart Mill and the Socialists Search for Utopia
  6. Marx Madness Plunges Economics into a New Dark Age
  7. Out of the Blue Danube: Menger and the Austrians Reverse the Tide
  8. Marshalling the Troops: Scientific Economics Comes of Age
  9. Go West, Young Man: Americans Solve the Distribution Problem in Economics
  10. The Conspicuous Veblen Versus the Protesting Weber: Two Critics Debate the Meaning of Capitalism
  11. The Fisher King Tries to Catch the Missing Link in Macroeconomics
  12. The Missing Mises: Mises (and Wicksell) Make a Major Breakthrough
  13. The Keynes Mutiny: Capitalism Faces its Greatest Challenge
  14. Paul Raises the Keynesian Cross: Samuelson and Modern Economics
  15. Milton’s Paradise: Friedman Leads a Monetary Counterrevolution
  16. The Creative Destruction of Socialism: The Dark Vision of Joseph Schumpeter
  17. Dr. Smith Goes to Washington: Market Economies Face New Challenges

Get 50% off (when accounting for free shipping)Thomas by ordering it from the Author

Routledge charges $54.95, plus shipping, but you can buy it directly from the author for only $35. Each copy is autographed, dated and mailed for no extra charge if mailed inside the United States.

To buy your copy, go to www.skousenbooks.com.

Yours for peace, prosperity, and liberty, AEIOU

Filed Under: Articles, Featured Post, Main Tagged With: Economy, GO, Gross Output, Mark Skousen

Why Ben Franklin Matters

January 17, 2022 By Mark Skousen Leave a Comment

Today is the 316th anniversary of the birth of founding father extraordinaire Benjamin Franklin (1706 – 1790). Franklin was an inventor, the first scientific American, the first diplomat of the United States, the first postmaster and a signer of both the Declaration of Independence and the Constitution. He was also the first President of the Pennsylvania Society for Promoting the Abolition of Slavery.

Michael Hart, the author of “The 100 Most Influential People in History,” considered Franklin to be “the most versatile genius in all of history.”

And the historian H. W. Brands considered Franklin “perhaps the most beloved and celebrated American of his age, or indeed any age.”

For investors, he was the founder of American capitalism and extolled the virtues of industry, thrift and prudence.

In his Autobiography and his “Poor Richard’s Almanac,” he was also famous for his pithy proverbs, financial adages and worldly wisdom.


Mark Skousen (aka Ben Franklin) and Eagle Financial Publication’s editor Paul Dykewicz.

As a direct descendant and a frequent portrayer of Ben Franklin, I have been collecting dozens of his sayings in my “Maxims of Wall Street.” In fact, Franklin is quoted more than any other financial guru except for Warren Buffett and Jesse Livermore.

Here are some great quotes from Franklin that apply to our personal lives and our nation:

“There is much revenue in economy, and no revenue is sufficient without economy.”

“Those who would give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety.”

“I am a mortal enemy to arbitrary government and unlimited power. I am naturally very jealous for the rights and liberties of my country, and the least encroachment of those invaluable privileges is apt to make my blood boil.”

“A virtuous and industrious people may be cheaply governed.”

“The system of America is commerce with all and war with none.”

“A fool and his money are soon parted.”

“An investment in knowledge pays the best interest.”

“Nothing but money is sweeter than honey.”

“Patience in market is worth pounds in a year.”

“Haste makes waste.”

“It is incredible the quantity of good that may be done in a country by a single man who will make a business of it.”

“I saw in the public papers of different states frequent complaints of hard times, deadness of trade, scarcity of money, etc. It is always in the power of a small number to make a great clamor. But let us take a cool view of the general state of our affairs, and perhaps the prospect will appear less gloomy than has been imagined.”

And finally, “The years roll round and the last will comes; when I would rather have it said, He lived usefully, than he died rich.”

Half Off for ‘Maxims of Wall Street’

If you haven’t received the latest 10th-anniversary edition of “The Maxims of Wall Street,” buy it today! Go to www.skousenbooks.com. The price is low, only $20 for the first copy, and $10 for all additional copies. They make great gifts. If you buy an entire box (32 copies), the price is only $300. I sign all books and pay for the postage if mailed in the United States.

P.S. I will be hosting a subscribers-only teleforum called “What’s New in Crypto & Our #1 Pick” on Jan. 27 at 2 p.m. Click here to register for free.

Until next Monday, this is Mark Skousen, saying so long, fellow free-marketeers, and remember, AEIOU.

Filed Under: Articles, Featured Post, Main Tagged With: Economy, GO, Gross Output, Mark Skousen

Economy Slows, But the Outlook is Still Positive

December 22, 2021 By Ned Piplovic Leave a Comment

Washington, DC (Wednesday, December 22, 2021): Today, the federal government released gross output (GO) – the measure of total spending in the economy – for the 3rd quarter. Real GO rose 4.4% (after inflation), a slowdown in the economy compared to the 2nd quarter. However, real GO grew faster than real GDP (2.3%), suggesting that the outlook for the economy and the stock market is still positive as we enter 2022, despite the supply-chain shortages.  While government and consumer spending were slightly negative for the third quarter, business spending rose sharply.

Gross Output (GO) is the top line in national income accounting; GDP is the bottom line. Both are essential to understanding where the economy is headed. According to Steve Forbes, GDP is the X-ray of the economy; GO is the CAT-scan. 

Worries about bottlenecks in the supply chain demonstrate the importance of GO, which includes intermediate purchases by businesses. GDP leaves out all intermediate production. 

Many economists feared a long economic downturn and marginal growth in the aftermath of the sharp economic decline in the second quarter 2020. However, with each additional quarter after that steep decline, it appears that the second-quarter 2020 downturn was just an immediate and short-term reaction to the 2020 economic slowdown caused primarily by government restrictions and business shutdowns in responses to the COVID-19 epidemic.

The 2021 economic data indicates that the U.S. economy is continuing full-steam ahead and is riding a steady growth trend. After robust expansions in the first two quarters, GDP and GO continued the trend and expanded again in Q3 2021, although at a slower pace due to supply-chain interruptions. 

GO grew 11.9% and GDP rose 8.1% in nominal terms. In real terms, GO rose 4.4% and outpaced GDP’s 2.3% expansion in the third quarter 2021. Due to a slight contraction in retail activity, the Adjusted Gross Output (GO*) – which includes the gross wholesale and gross retail figures (included only as net figures in the GO reported by the BEA) advanced 11.2% in the third quarter 2021. The difference between net and gross figures amounts to more than $9.8 trillion, which is missing from the government’s official GO figure.

Following the initial impact of the pandemic in Q2 2020, economic indicators retreated to 2017 levels. However, all indicators have been recovering steadily and Gross Output reached several new milestones. Nominal Gross Output ($41.85 trillion) exceeded the $41 trillion mark for the first time ever in Q2 2021. In real terms, GO ($35.34 trillion) broke for the first time above $35 trillion. Also, after crossing over the $50 trillion mark in the previous quarter, Adjusted GO ($51.66 trillion) pushed past the $51 trillion mark for the first time.

Despite renewed concerns of COVID infections resurgence, the positive growth figures released by the government today offer support for the optimistic outlook regarding economic growth, at least over the near term. Even with potential concerns of the spread of the COVID omicron variant in some states and some countries around the world, many states are continuing to lift business restrictions and reopen their economies. While vigilant about implementing procedures to protect their employees and customers, many businesses feel confident that they have enough information about COVID to resume relatively normal business practices. As long as state and federal governments lessen regulatory burdens and do not impose new mandates, near-normal economic activities should return, which would continue to fuel the current economic growth trends.

While most of the economic data support cautious optimism about continued economic expansion, there are some headwinds that could slow growth considerably over the longer term. They include supply-chain bottlenecks, and rising inflation. After being held down by the Fed’s expansion of the money supply, the currently reported inflation rate of nearly 7% (https://www.bls.gov/news.release/cpi.nr0.htm) is significantly higher than historical averages and many economists believe that it will get worse. Even the Federal Reserve is considering revising its long-term inflation target from 2% to 3%.

Additionally, the U.S. Congress and the current executive branch are putting in a coordinated effort to implement higher taxes – especially higher corporate tax rates – increase minimum wages, as well as a slew of other policies that would stifle economic growth.

However, the Biden administration’s efforts to push through a tax-and-spending bill have been postponed after U.S. Senator Joe Manchin (D-WV) released a statement stating that he will not be voting for the current Build Back Better Act, which according to the Congressional Budget Office (CBO) would add more than $4.5 trillion to the national debt. (https://www.manchin.senate.gov/newsroom/press-releases/manchin-statement-on-build-back-better-act). The economy is still operating on the Trump tax cuts. 

Business – Not Consumers – Drives the Economy

As it did during the previous four periods, business spending continues to outpace consumer spending in the third quarter 2021.

Contrary to views of many academic economists and widespread media reports, consumer spending does not drive the economy, and does not represent two-thirds of the economy. Using GO as a better and a more accurate measure of total spending in the economy, the business sector (B2B spending) is almost twice the size of consumer spending. Consumer spending is the effect, not the cause, of prosperity (Say’s law).

Therefore, our business-to-business (B2B) index is very useful for assessing the economy’s underlying health and the readiness to rebound after economic downturns. The B2B Index measures all the business spending in the supply chain and new private capital investment. In the third quarter 2021, B2B activity rose 14.7% to $30.26 trillion in nominal terms. This growth is significantly faster than consumer spending expansion, which increased 7.2% to $15.97 trillion in the third quarter. However, the discrepancy is even more pronounced in real terms. While real B2B activity expanded 8.7% to $25.38 trillion, real consumer spending declined 0.3% from $13.487 trillion to $13.479 trillion in Q3.

Economy

“B2B spending is in fact a pretty good indicator of where the economy is headed since it measures spending in the entire supply chain,” stated Skousen. “After rebounding 39% in the period immediately after the decline in the first half of 2020, business activity is continuing to expand at high single-digit rates in real terms, which is significantly higher than the low single-digit historical average.”

Gross Output Growth Continues to Outpace GDP Expansion in the Third Quarter to Suggest Continued Economic Recovery

Gross Output indicates robust long-term growth in the first two quarters in 2020. GO’s continued and steady recovery over the last five periods indicates that, barring any new “black swan” events, the robust economic growth is likely to continue as we draw closer to the end of 2021.

The Gross Output data report for Q4 and year-end 2021 is scheduled for release in late March 2022. The current trend supports optimism that the recovery should continue into 2022, unless supply disruptions and rising inflation, taxes, and interest rates dampen the recovery.

Gross Output is a leading indicator of what GDP will do in the next quarter and beyond. As David Ranson, chief economist for the private forecasting firm HCWE & Co., states, “Movements in gross output serve as a leading indicator of movements in GDP.”  The latest GO data suggests that the economy will continue to expand, albeit probably at a slower rate.  Stagflation is still a possibility in 2022. 

The federal government will release the advance estimate for fourth-quarter and full-year 2021 GDP on January 27, 2022. The full release of Gross Output data and the third estimate of GDP are scheduled for March 30, 2022.  

Important Note:  We are hopeful that in the near future, the BEA will release GO at the same time as the first estimate of GDP for the quarter, not the third estimate. 

Report on Various Sectors of the Economy

After the general decline in the first two periods of 2020 and a robust recovery in the second half of that year, most sectors of the economy are continuing their expansion in 2021.

Following a rapid decline in the first half of 2020 and steady expansion over the next four quarters, the mining sector remained flat for Q3 2021. This result was driven by the Oil and gas extraction sub-segment which also delivered no change over the previous period and which accounts for more than 80%of the entire Mining sector. The mining sector comprises only a 1.8% share of the overall economy, but it represents the earliest stages of production. Therefore, we watch the expansion and contraction of the Mining segment as early indicators of what other sectors further down the supply chain might do in subsequent periods.

While declining for the third consecutive quarter, the Agriculture sector seems to be going in the right direction as the declines are getting smaller. After contracting 5.7% in Q1 and 4.1% in Q2, the segment declined only 3.6% in the third period 2021.

Following a 1.7% pullback in the previous period, manufacturing – the second largest segment of the economy with a 16.7% share – declined 0.9% in the third quarter. While the overall segment contracted, the expansion of few sub-segments, such as Primary metals (4.4%), Machinery (8%), Computer and electronic products (1.6%), Petroleum and coal products (15.6%), and Chemical products (6.6%), indicates that there still might be enough business spending to support steady economic growth as we approach the beginning of 2022.

Similarly, while the retail trade contracted 4.5% – primarily driven by a 25% decline in Motor vehicle and parts dealers buying activity – the Wholesale trade notched an expansion of 9.4% in the third quarter, after growing 10.5% in the previous period.

After several periods of steady growth, the Construction sector delivered its second consecutive contraction and declined 8.4% in the third quarter.

Behind a substantially lower growth of only 4.2% in Q2, the Transportation and warehousing sector expanded 18.4%, which is closer to the 19.1% and 18.8% expansions from Q4 2020 and Q1 2021, respectively. The sub-segment with the highest growth was Air transportation, which expanded 86% in Q3, after recording 65% and 73% surges in the previous two periods. Additionally, the Water transportation sub-segment advanced 34%, and the Transit and ground passenger transportation sub-segment expanded 59%.

Following a 4.2% contraction in Q1 and a 9.5% expansion in Q2 2021, the educational services, health care, and social assistance segment grew another 4.1% in the most recent period. After faltering in Q2 with a paltry 1.5% growth rate, Finance, insurance, real estate, rental, and leasing – the largest segment which accounts for nearly one-fifth of GO – grew 6.6% in Q3.

With virtually no expansion in Q2 2021, total government spending followed suit and inched just 0.3% higher in Q3. However, government spending at local and state levels, which accounts for two-thirds of total government spending, rose 4.3% after expanding 4% in Q2.

Economy

Gross output (GO) and GDP are complementary statistics in national income accounting. GO is an attempt to measure the “make” economy; i.e., total economic activity at all stages of production, similar to the “top line” (revenues/sales) of a financial accounting statement. In April 2014, the BEA began to measure GO on a quarterly basis along with GDP.

Gross domestic product (GDP) attempts to measure the “use” economy, i.e., the value of finished goods and services ready for use by consumers, business and government. GDP is not quite the same as the “bottom line” (profit, or net income) of an accounting statement, but rather the “value added” or the value of final use. 

GO tends to be more sensitive to the business cycle, and more volatile, than GDP.

 

About GO and B2B Index

Skousen champions Gross Output as a more comprehensive measure of economic activity. “GDP leaves out the supply chain and business to business transactions in the production of intermediate inputs,” he notes. “That’s a big part of the economy, bigger than GDP itself. GO includes B2B activity that is vital to the production process. No one should ignore what is going on in the supply chain of the economy.”

Skousen first introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990). A new third edition was published in late 2015 and is now available on Amazon.

Click here: Structure of Production on Amazon

The BEA’s decision in 2014 to publish GO on a quarterly basis in its “GDP by Industry” data is a major achievement in national income accounting. GO is the first output statistic to be published on a quarterly basis since GDP was invented in the 1940s.

The BEA now defines GDP in terms of GO. GDP is defined as “the value of the goods and services produced by the nation’s economy [GO] less the value of the goods and services used up in production (Intermediate Inputs or II].” See definitions at https://www.bea.gov/newsreleases/industry/gdpindustry/gdpindnewsrelease.htm

With GO and GDP being produced on a timely basis, the federal government now offers a complete system of accounts. As Dale Jorgenson, Steve Landefeld, and William Nordhaus conclude in their book, A New Architecture for the U. S. National Accounts, “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”

Skousen adds, “Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and the business cycle, and demonstrates that business spending is more significant than consumer spending,” he says. “By using GO data, we see that consumer spending is actually only about a third of economic activity, not two-thirds that is often reported by the media. As the chart above demonstrates, business spending is in fact almost twice the size of consumer spending in the US economy.”

 

For More Information

Steve Forbes: What’s Ahead podcast. In this podcast, Steve Forbes discusses Gross Output with Mark Skousen on September 9, 2019:  https://www.forbes.com/sites/steveforbes/2019/09/09/were-using-the-wrong-measure-gdp-to-gauge-the-economys-real-health-mark-skousen/#35ff3d9a52fa

GO-Day podcast discussion panel hosted Mark Skousen that included Steve Forbes, Sean Flynn, Steve Hanke, and David Ranson, September 30, 2020: https://chapman.zoom.us/rec/share/KJ17YjuR_6zthmgOA5fNprv2e65F-jICOsf430bJvnu8qWzdPYPfTohPC48qRLe9.Q8rmnlXynnTN74Tv?startTime=1601488807000

The GO data released by the BEA can be found at www.bea.gov under “Quarterly GDP by Industry.” Click on interactive tables “GDP by Industry” and go to “Gross Output by Industry.” Or go to this link directly: http://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=3&isuri=1&5102=15

For more information on Gross Output (GO), the Skousen B2B Index, and their relationship to GDP, see the following:

Mark Skousen, “If GDP Lags, Watch the Economy Grow,” Wall Street Journal, April 24, 2018:  https://www.grossoutput.com/2018/04/26/away-go-economy-growing-faster-expected/

Mark Skousen, “At Last, a Better Way to Economic Measure” lead editorial, Wall Street Journal, April 23, 2014: http://on.wsj.com/PsdoLM

Steve Forbes, Forbes Magazine (April 14, 2014): “New, Revolutionary Way To Measure The Economy Is Coming — Believe Me, This Is A Big Deal”: http://www.forbes.com/sites/steveforbes/2014/03/26/this-may-save-the-economoy-from-keynesians-and-spend-happy-pols/

Mark Skousen, Forbes Magazine (December 16, 2013): “Beyond GDP: Get Ready For A New Way To Measure The Economy”: http://www.forbes.com/sites/realspin/2013/11/29/beyond-gdp-get-ready-for-a-new-way-to-measure-the-economy/

Steve Hanke, Globe Asia (July 2014): “GO: J. M. Keynes Versus J.-B. Say,” http://www.cato.org/publications/commentary/go-jm-keynes-versus-j-b-say

David Ranson, “Output growth data that the economy generates months earlier than GDP,” Economy Watch, July 24, 2017. HCWE & Co. http://www.hcwe.com/guest/EW-0717.pdf

Mark Skousen, “Linking Austrian Economics to Keynesian Economics,” Journal of Private Enterprise, Winter, 2015: http://journal.apee.org/index.php?title=Parte7_Journal_of_Private_Enterprise_vol_30_no_4.pdf

To interview Dr. Mark Skousen on this press release, contact him at [email protected], or Ned Piplovic, Media Relations at [email protected]

# # #

________________________________________

[1] The BEA currently uses a limited measure of total sales of goods and services in the production process. Once products are fabricated and packaged at the manufacturing stage, the BEA’s GO only adds “net” sales at the wholesale and retail level. Its official GO for the 2021 3rd quarter is $41.85 trillion. By including gross sales at the wholesale and retail level, the Adjusted GO (GO*) expands to $51.66 trillion in Q3 2021. Thus, the BEA omits more than $9.8 trillion in business-to-business (B2B) transactions in its GO statistics. We include them as a legitimate economic activity that should be accounted for in GO, which we call Adjusted GO. See the new introduction to Mark Skousen, The Structure of Production, 3rd ed. (New York University Press, 2015), pp. xv-xvi.

Filed Under: Articles, Featured Post, Main Tagged With: Economy, GO, Gross Output, Mark Skousen

Despite Higher Inflation, the U.S. Economy Continues to Boom: Gross Output (GO) Hits $50 Trillion!

September 30, 2021 By Ned Piplovic Leave a Comment

Washington, DC (Thursday, September 30, 2021): For the first time in history, total spending in the economy, Gross Output (GO), hit $50 trillion 2021, based on the latest economic data release. 

Gross Output (GO) is the top line in national income accounting; GDP is the bottom line. Both are essential to understanding where the economy is headed. According to Steve Forbes, GDP is the X-ray of the economy; GO is the CAT-scan. 

On September 30, 2021, the federal Bureau of Economic Analysis (BEA) released data for the second quarter 2021 Gross Output – the most comprehensive measure of total spending in the economy, including the supply chain. The data indicates that Gross Output continued to expand in the second quarter 2021 and its expansion outperformed GDP growth for the third consecutive period. 

Business-to-business (B2B) spending also is growing faster than consumer spending, another good sign. 

Many economists feared a long economic downturn and marginal growth in the aftermath of the sharp economic decline in the second quarter 2020. However, it appears that the second-quarter downturn was just a short term reaction to the 2020 economic slowdown caused primarily by government restrictions and business shutdowns in responses to the COVID-19 epidemic.

The 2021 economic data indicates that the U.S. economy is continuing full-steam ahead and is riding a steady growth trend. After robust expansions in Q4 2020 and Q1 2021 of 7.0% and 8.8%, respectively, GDP and GO continued the trend and expanded again in Q2 2021.

GDP rose 12.8% and GO grew 14.2% in nominal terms. In real terms, GDP rose 6.7% and outpaced GO’s expansion of 5.5% in the second quarter 2021. However, accounting for the full impact of gross wholesale and gross retail – which are included only as net figures in the GO reported by the BEA – the Adjusted Gross Output (GO*) advanced 7.4% in the second quarter 2021. The difference between in net and gross figures amounts to more than $9.6 trillion, which is missing from the government’s official GO figure.

Following the initial impact of the pandemic, GDP declined in Q2 2020 to its lowest level since Q2 2017. However, GDP has been recovering ever since then. After surpassing its previous high from Q4 2019 in the first quarter this year, GDP set another new high in Q2 2021. However, both GO and Adjusted GO (GO*) reached new milestones as well. Gross Output exceeded $40 trillion for the first time ever in Q2 2021, and Adjusted GO broke above the $50 trillion mark.

The latest set of positive growth figures affirms once more that the economic growth outlook remains positive. Even with potential concerns of the spread of the COVID delta variant, more states are lifting business restrictions and reopening their economies. This is just another factor that could offer people the needed confidence to resume normal economic activities, which will fuel economic growth further.

However, there are few concerns that might hinder the progress and dampen future economic growth. After years of deflation fears, inflation is rearing its ugly head once again. The currently reported rate of inflation of 5% is significantly higher than historical averages and many economists believe that it will get worse. Even the Federal Reserve is looking to revise its inflation target from 2% to 3%.

Furthermore, the U.S. Congress and the current executive branch are putting in a coordinated effort to implement higher taxes – especially higher corporate tax rates – increase minimum wages, and a slew of other policies that would stifle economic growth. You can read more about these concerns that could derail our economic recovery in today’s edition of Mark Skousen’s free weekly newsletter, Skousen CAFÉ. (https://www.markskousen.com/signups/skousen-investor-cafe/)

Another indication that the economic pullback last year was only a temporary event is the relationship between the GO and GDP decline during that period. Earlier stages of production are generally more sensitive and more volatile in their response to economic disruptions. Therefore, during past recessions, GO commonly declined significantly more than GDP, which captures only final outputs in the economy.

For instance, GO declined more than 26% during the last quarter 2008. In the same period, GDP pulled back less than 8%. The 2020 economic slowdown broke from this pattern and saw GO decline at similar rates as the GDP. Over the last three quarters, GO has been recovering and expanding faster than GDP.

This anomaly from the established historical pattern, provides another indication that the underlying business fundamentals are significantly stronger than originally anticipated, that government shutdowns in response to the COVID-19 epidemic might have been unnecessary. Those responses might have even amplified the initial economic contraction in the second-quarter 2020.

More importantly, as it did during the previous four periods, business spending continues to outpace consumer spending in the second quarter 2021.

Business – Not Consumers – Drives the Economy

Contrary to views of many academic economists and wide-spread media reports, consumer spending does not drive the economy, and does not represent two-thirds of the economy. Using GO as a better and a more accurate measure of total spending in the economy, the business sector (B2B spending) is almost twice the size of consumer spending. Consumer spending is the effect, not the cause, of prosperity (Say’s law).

Therefore, our business-to-business (B2B) index is very useful for gauging the economy’s underlying health and the readiness to rebound after economic downturns. The B2B Index measures all the business spending in the supply chain and new private capital investment. In the second quarter 2021, B2B activity and consumer spending increased at similar rates – B2B at 17.4% to $29. trillion and consumer spending at 18% to $15.7 trillion. However in real terms, B2B activity expanded at a faster annualized rate of 11.3% to $24.8 trillion than consumer spending, which increased 9.1% to $13.5 trillion.

Gross Output

“B2B spending is in fact a pretty good indicator of where the economy is headed, since it measures spending in the entire supply chain,” stated Skousen. “After rebounding 39% in the period immediately after the decline in the first half of 2020, business activity is continuing to expand at double digit rates in real terms, which is significantly higher than the low single digit average historical trend.”

Adjusted Gross Output Growth Continues to Outpace GDP Expansion in Second Quarter to Suggest Continued Economic Recovery

Despite significant declines in the first two quarters of 2020, Gross Output indicates robust long-term growth since then. Prior to what appears to be merely a short-term pullback, GO delivered steady quarterly growth over the previous 42 consecutive periods. Gross Output growth slowed in late 2019, which could have been an early sign of economic slowdown even before the pandemic and government shutdowns in early 2020.

However, GO’s continued and steady recovery over the last four periods indicates that, barring any new “black swan” events, the robust economic growth is likely to continue as we draw closer to the end of 2021. The next Gross Output data report for Q3, which is scheduled for release in late-December 2021, should provide early indications whether the recovery will continue into 2022, or whether rising inflation, taxes and interest rates will dampen the recovery. Gross Output is a leading indicator of what GDP will do in the next quarter and beyond. As David Ranson, chief economist for the private forecasting firm HCWE & Co., states, “Movements in gross output serve as a leading indicator of movements in GDP.”

The federal government will release the advance estimate for third-quarter 2021 GDP on October 28, 2021 and the full release of Gross Output, as well as the third estimate of GDP on December 22, 2021.  

Important Note:  We are hopeful that in the near future, the BEA will release GO at the same time as the first estimate of GDP for the quarter, not the third estimate. 

Report on Various Sectors of the Economy

After the general decline in the first two periods of 2020 and a robust recovery in the second half of that year, most sectors of the economy are continuing their expansion in the first half of 2021.

Following a rapid decline in the first half of 2020, the mining sector delivered its fourth consecutive expansion in Q2 2021. Driven by a 20% expansion of the Oil and gas extraction sub-segment, the mining sector expanded 13.1% in real terms. While comprising only a 1.8% share of the overall economy, the mining sector represents the earliest stages of production. Therefore, we watch the expansion and contraction of the Mining segment as early indicators of what other sectors further down the supply chain might do in subsequent periods.

The Agriculture sector followed a 5.7% contraction from Q1 with a 4.1% real-term decline in Q2. Manufacturing – which is the second largest segment of the economy with a 16.7% share – declined 1.7% after contracting 0.7% in the previous period. While accounting for more than half of the segment, Nondurable goods contracted nearly 1.3% and Durable goods declined 2.1%.

After contracting 4.2% in the previous period, Educational services, health care, and social assistance expanded 9.5% in Q2 2021. The largest segment of the economy, Finance, insurance, real estate, rental, and leasing segment, which accounts for nearly one-fifth of GO, followed a 10% growth in the last quarter with a more tepid increase of 1.5% in Q2. One of the reasons for this slow second-quarter growth is that the Finance and insurance sub-segment declined 1.2% after surging more than 17% in the previous period. On a positive note, after surging more than 20% in Q1, the Federal Reserve banks, credit intermediation, and related activities sub-segment contracted nearly 11%. While this might seem like a positive development, one concern is that the decline in Fed’s activity might be an early warning of a tightening money policy, which would push interest rates higher. 

After several periods of steady growth, the Construction sector reversed trend and pulled back 8.6% in Q2. While unable to maintain its growth rate of more than 17% in the previous two periods, the Transportation and warehousing sector still expanded in Q2, albeit at 4.2%. The sub-segment with the highest growth was Air transportation, which expanded 73.4% in Q2 after recording a 65% surge in the previous period. Alternatively, the Pipeline transportation sub-segment contracted nearly 47%, after a 68% first-quarter expansion.

After no expansion in Q4 2020 and modest 1.5% growth in Q1 2021, total government spending declined 1.6% in Q2 2021. While federal spending fell 6.6% for the period, government spending at the local and state levels expanded 0.8%. Since spending at local and state levels is nearly twice the federal spending, the small increase at the local and state levels offset the large federal decline and minimized the overall spending decline.

Gross Output
Gross output (GO) and GDP are complementary statistics in national income accounting. GO is an attempt to measure the “make” economy; i.e., total economic activity at all stages of production, similar to the “top line” (revenues/sales) of a financial accounting statement. In April 2014, the BEA began to measure GO on a quarterly basis along with GDP.

Gross domestic product (GDP) is an attempt to measure the “use” economy, i.e., the value of finished goods and services ready to be used by consumers, business and government. GDP is not quite the same as the “bottom line” (profit, or net income) of an accounting statement, but rather the “value added” or the value of final use. 

GO tends to be more sensitive to the business cycle, and more volatile, than GDP.

About GO and B2B Index

Skousen champions Gross Output as a more comprehensive measure of economic activity. “GDP leaves out the supply chain and business to business transactions in the production of intermediate inputs,” he notes. “That’s a big part of the economy, bigger than GDP itself. GO includes B2B activity that is vital to the production process. No one should ignore what is going on in the supply chain of the economy.”

Skousen first introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990). A new third edition was published in late 2015, and is now available on Amazon.

Click here: Structure of Production on Amazon

The BEA’s decision in 2014 to publish GO on a quarterly basis in its “GDP by Industry” data is a major achievement in national income accounting. GO is the first output statistic to be published on a quarterly basis since GDP was invented in the 1940s.

The BEA now defines GDP in terms of GO. GDP is defined as “the value of the goods and services produced by the nation’s economy [GO] less the value of the goods and services used up in production (Intermediate Inputs or II].” See definitions at https://www.bea.gov/newsreleases/industry/gdpindustry/gdpindnewsrelease.htm

With GO and GDP being produced on a timely basis, the federal government now offers a complete system of accounts. As Dale Jorgenson, Steve Landefeld, and William Nordhaus conclude in their book, A New Architecture for the U. S. National Accounts, “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”

Skousen adds, “Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and the business cycle, and demonstrates that business spending is more significant than consumer spending,” he says. “By using GO data, we see that consumer spending is actually only about a third of economic activity, not two-thirds that is often reported by the media. As the chart above demonstrates, business spending is in fact almost twice the size of consumer spending in the US economy.”

More Information about GO

Steve Forbes: What’s Ahead podcast. In this podcast, Steve Forbes discusses Gross Output with Mark Skousen on September 9, 2019:  https://www.forbes.com/sites/steveforbes/2019/09/09/were-using-the-wrong-measure-gdp-to-gauge-the-economys-real-health-mark-skousen/#35ff3d9a52fa

GO-Day podcast discussion panel hosted Mark Skousen that included Steve Forbes, Sean Flynn, Steve Hanke, and David Ranson, September 30, 2020: https://chapman.zoom.us/rec/share/KJ17YjuR_6zthmgOA5fNprv2e65F-jICOsf430bJvnu8qWzdPYPfTohPC48qRLe9.Q8rmnlXynnTN74Tv?startTime=1601488807000

The GO data released by the BEA can be found at www.bea.gov under “Quarterly GDP by Industry.” Click on interactive tables “GDP by Industry” and go to “Gross Output by Industry.” Or go to this link directly: http://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=3&isuri=1&5102=15

For more information on Gross Output (GO), the Skousen B2B Index, and their relationship to GDP, see the following:

Mark Skousen, “If GDP Lags, Watch the Economy Grow,” Wall Street Journal, April 24, 2018:  https://www.grossoutput.com/2018/04/26/away-go-economy-growing-faster-expected/

Mark Skousen, “At Last, a Better Way to Economic Measure” lead editorial, Wall Street Journal, April 23, 2014: http://on.wsj.com/PsdoLM

Steve Forbes, Forbes Magazine (April 14, 2014): “New, Revolutionary Way To Measure The Economy Is Coming — Believe Me, This Is A Big Deal”: http://www.forbes.com/sites/steveforbes/2014/03/26/this-may-save-the-economoy-from-keynesians-and-spend-happy-pols/

Mark Skousen, Forbes Magazine (December 16, 2013): “Beyond GDP: Get Ready For A New Way To Measure The Economy”: http://www.forbes.com/sites/realspin/2013/11/29/beyond-gdp-get-ready-for-a-new-way-to-measure-the-economy/

Steve Hanke, Globe Asia (July 2014): “GO: J. M. Keynes Versus J.-B. Say,” http://www.cato.org/publications/commentary/go-jm-keynes-versus-j-b-say

David Ranson, “Output growth data that the economy generates months earlier than GDP,” Economy Watch, July 24, 2017. HCWE & Co. http://www.hcwe.com/guest/EW-0717.pdf

Mark Skousen, “Linking Austrian Economics to Keynesian Economics,” Journal of Private Enterprise, Winter, 2015: http://journal.apee.org/index.php?title=Parte7_Journal_of_Private_Enterprise_vol_30_no_4.pdf

To interview Dr. Mark Skousen on this press release, contact him at [email protected], or Ned Piplovic, Media Relations at [email protected]

# # #

________________________________________
[1] The BEA currently uses a limited measure of total sales of goods and services in the production process. Once products are fabricated and packaged at the manufacturing stage, the BEA’s GO only adds “net” sales at the wholesale and retail level. Its official GO for the 2021 2nd quarter is $40.6 trillion. By including gross sales at the wholesale and retail level, the adjusted GO expands to $50.2 trillion in Q2 2021. Thus, the BEA omits more than $9.6 trillion in business-to-business (B2B) transactions in its GO statistics. We include them as a legitimate economic activity that should be accounted for in GO, which we call Adjusted GO. See the new introduction to Mark Skousen, The Structure of Production, 3rd ed. (New York University Press, 2015), pp. xv-xvi.

Filed Under: Articles, Featured Post, Main Tagged With: Economy, GO, Gross Output, Mark Skousen

America’s Success Story is Due to a Little-Known Clause in the Constitution

September 17, 2021 By Ned Piplovic Leave a Comment

Constitution

By Mark Skousen

 

Today is Constitution Day, the anniversary of the day members of the Continental Congress signed the US Constitution on September 17, 1787. 

There are several extremely important clauses in the Constitution that very few scholars recognize but which destined America to become the superpower that it is today. 

Here is my short column on this breakthrough principle in a recent Skousen CAFE:

 

Canada Closes Its Borders for No Good Reason

We received a call from a Canadian couple who said that they had to cancel coming to FreedomFest. They wanted to attend “the greatest libertarian show on earth,” but the Canadian authorities have decided to close the border to all “non-essential” travel.

Which raises an interesting question: Why were the Canadian and Mexican borders closed in 2020 and 2021, while the borders between states remained open?

Even now, while Americans can travel or move freely between states from coast to coast, they cannot travel to and from Canada and Mexico.

Did the pandemic suddenly stop at the borders?

The reason is simple to explain, but often involves a principle taken for granted by American citizens: The United States Constitution does not allow state governors to close their borders to adjacent states. Countries can do it, but not states.

None of the 50 states can keep you from visiting, moving or working in another state. They cannot keep you from transferring money, capital or goods to another state. They cannot require a passport for you to enter their state. They cannot impose any import or export duties between states.

The only exception is for the inspection of fruits and vegetables, something California does.

It’s All in The Constitution Section 9 and 10 of Article I of the U.S. Constitution is clear:

“No Tax or Duty shall be laid on Articles exported from any State.

“No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.

“No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws.”

And Article 4, section 2, states:

“The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.”

Finally, the 14th Amendment states:

“No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

 

Creating a Gigantic Free-Trade Zone from Coast to Coast

That’s why we are called the United States of America. The uniting of the 50 states economically is a major reason why America leads the world as an economic powerhouse.  It has created a gigantic free-trade zone from coast to coast. 

Ancient Rome had a similar arrangement.  There were no trade restrictions inside the Roman empire; it was one reason the Roman empire lasted so long. 

Recently, European nations have attempted to imitate our success with the creation of the European Union, sometimes called the “United States of Europe,” along with a single currency, the euro — to create a large free-trade zone of money, labor and capital.

Does the Constitution Limit or Expand State Powers? On the other hand, Article I, Section 8, grants extremely broad powers to Congress — to print money, expand credit, level taxes and import duties and declare war. You can drive a truck through section 8 of the Constitution.

As George Washington allegedly said, “Government is a dangerous servant and a fearful master.”

At this year’s FreedomFest, we had a big debate on “The Constitution: Conceived in Liberty or Conspiratorial Coup?”  We debated libertarian Murray Rothbard’s controversial contention that the Constitutional Convention of 1787 was a power grab to dramatically increase the state’s control of the new nation.  

Professor Patrick Newman, a fellow of the Mises Institute, argued in favor of Rothbard’s thesis, that James Madison called the Convention to secretly expand the power of the state. He was followed with commentary by legal authorities John Norton Moore (University of Virginia) and Anastasia Boden, senior attorney for the Pacific Legal Foundation, who defended the Constitution.  It was an electrifying debate. 

You can order this session for only $5 at https://miracleofamerica.com/products/21-023?_pos=2&_sid=6acae2641&_ss=r

All 200 plus sessions can be accessed at miracleofamerica.com.  Price is only $195.  

Happy Constitution Day! 

In liberty, AEIOU,

Mark Skousen

Filed Under: Articles, Featured Post, FreedomFest, Main Tagged With: Constitution, Constitution Day, Economics, FreedomFest, Mark Skousen

Are We Rome?

September 13, 2021 By Ned Piplovic 3 Comments

By Mark Skousen

Talk delivered on Saturday, September 11, 2021, Kimber Academy in Lehi, Utah and Liberty United Festival in Vineyard, Utah

“History does not repeat itself, but it does rhyme.” – Mark Twain

“In the end, there was no money left to pay the army, build forts or ships, or protect the frontier. The barbarian invasions were the final blow to the Roman state in the fifth century, [caused] by three centuries of deterioration in fiscal capacity…”
— Bruce Barlett, “How Excessive Government Killed Ancient Rome,” Cato Journal (1994)

It was 20 years ago today that my wife and I arrived in New York, where I was installed as president of the Foundation for Economic Education (FEE), and witnessed first hand the 9/11 terrorist attacks.  It was an unforgettable day of infamy, and has so affected our culture, our liberties and our lives that we observe the date every year. 

Looking back, one thing I remember the most was that New Yorkers and Americans in general were completely unified in spirit at this time.  For months, residents posted pictures of family members who had died on 9/11.  Everyone was kind and friendly, like we were brothers and sisters in this together.  A few weeks later, I carried a large box of books downtown, and a New Yorker offered to help carry the box up the stairs from the train station. 

The other thing that I noticed is the street vendors in New York never displayed or sold post cards or pictures of airlines flying into the Twin Towers.  They respected the depth of sorrow after this event. 

The City was shut down for some time and everyone in the New York tried to access the damage and further threats to our security. Smoke filled the city, businesses closed and events were canceled. 

The first decision I had to make as the new president of FEE was to determine if we should cancel our annual Liberty dinner scheduled in October.  Our keynote speakers was Paul Gigot, the new editor of the Wall Street Journal, and I couldn’t even get a hold of him. (The Journal had moved their headquarters temporarily from Wall Street across the river to New Jersey.)

I gathered my staff the next day to make the decision.  Most staff members thought we should cancel or postpone the Liberty dinner. Our phones were quiet.  Nobody was calling in to sign up for the dinner.  I thought about it, and then said, “My first act as president of FEE is not going to cancel our annual dinner.  If that means just all of us sitting around the kitchen table, then so be it.” 

It was the right thing to do.  Within a week the phones started ringing again, and we had a full crowd of over 200 people at the Harvard Club in October, and Paul Gigot showed up and we had a big success. 

Since then, many friends of liberty have asked the question, “Are our freedoms in jeopardy?  Is America in decline like ancient Rome?”  I have a dozen books on ancient Rome in my library, and after Jake Oaks, the producer of the Liberty United Festival asked me to speak on this topic on 9/11, I read through these books, including Edward Gibbon’s classic 6-volume work, The Decline and Fall of the Roman Empire, published in 1776. 

We decided to debate this question at FreedomFest in 2013. 

Are we Rome?

Our theme at FreedomFest was “Are We Rome?” to be held appropriately at Caesar’s Palace in Las Vegas.  We had a record turnout that year.

To introduce the theme, we showed this 3-minute.  Watch it here:  Are We Rome? FreedomFest 2013 on Vimeo

We had quite a group of speakers on this topic: 

Steve Forbes, author, “Power Ambition Glory: The Stunning Parallels between the Ancient World and Today.”

Lawrence W. Reed, president of FEE, “The Fall of Rome and Modern Parallels.” (Afterwards, he spoke numerous times around the country on this question, and write a pamphlet, “Are We Rome?” published by FEE:  https://fee.org/resources/are-we-rome-by-lawrence-w-reed/)

Marc Eliot, Hollywood’s #1 biographer, on “Ben Hur, Spartacus, Cleopatra, Gladiator: Epic Films of Roman Times.”

Paul Cantor, University of Virginia professor of English literature, on “Empire and the Loss of Freedom: What Shakespeare’s Rome Can Tell About Us.”

Doug Casey (author and investment writer) vs. Harry Veryser (economist at the University of Detroit-Mercy and Catholic historian) will debate “Did Christianity Cause the Fall of Rome?”

Pat Heller, Liberty Coin Co., “The Rise and Fall of Rome’s Money — And What It Means for America Today.” He has samples of Roman coins to show attendees.

David Boaz, Cato Institute, “George Washington, a Modern-day Cincinnatus: The Man Who Would NOT be King.”

Jo Ann Skousen, professor of English literature at Mercy College and director of Anthem film festival, on “Greek and Roman Mythology in 50 Minutes.”

Jim Gwartney and Randy Holcomb (Florida State economists): “The Decline of Economic Freedom in America: Are We on the Path to Rome?”

Tom Palmer: “Rome’s Last Citizen: The Life and Legacy of Cato, Mortal Enemy of Caesar” and “Cicero: The Life and Times of Rome’s Greatest Citizen” — Tom is always knowledgeable on all things historical.

J. C. Bradbury, top sports economist (Kennesaw State University), on “Who Are The Modern-Day Gladiators? Sports as an Alternative to War.”

Valerie Durham, Isadora Duncan dance instructor, “Music and Dance in Roman Times.”

We are Different….

Of course, we are different from ancient Rome in a thousand ways.  Theirs was largely agrarian.  Our standard of living and technological advances are 100 times higher than the average Roman citizen of 2000 years ago.  Life expectancy was only 41 for Roman men and 29 for women.  Life was cheap.  Over half the population in the Roman empire were slaves.  Women could not vote.  Romans worshiped a plurality of gods, and only became Christian near the end.  They loved blood sports where for entertainment the masses enjoyed watching slaves and gladiators and even Christians die.  Dictators often killed their enemies (Cicero and Cato being prime examples.) 

There was virtually no middle class – only rich and poor.  After the republic, Rome was ruled mainly by tyrants and dictators.  And Roman leaders like Caesar and Augustus would be baffled by how the United States treated the conquered nations of Germany and Japan after World War II.  Finally, we are babes in the woods compared to Rome.  Our republic has lasted nearly 250 years; Rome lasted 1,000 years. 

…And We Are Alike

But in other ways, we are much like ancient Rome.  Both nations were born in a revolt against monarchy – the American colonies against a British sovereign, Rome against its own kings – and replaced it with a republic.  Like Rome of old, America dominates the world militarily, culturally, and economically.  American English is the language of commerce and science.  Like ancient Rome, we are a melting pot of ethnic groups.  Fifty states are united into a gigantic free-trade zone, and we’ve enjoyed decades without world war. 

As Adam Smith once said, “Little else is required for a nation to go from the lowest barbarism to the highest level of opulence but peace, easy taxes and a tolerable administration of justice.” 

Books and Speeches on Ancient Rome and Today

The question “Are We Rome?” remains a popular debate topic for Americans since we became a superpower in the 20th century.  Hollywood, in particular, has been fascinated with the story of ancient Rome, and many films with Roman themes have become classics, such as Ben Hur, Spartacus, and Gladiator. 

I have the first edition of a book, The New Deal in Old Rome, published by Alfred A. Knopf in 1939, in which the author, H. J. Haskell, a reporter for the Kansas City Star, contends that the decline and fall of the Roman empire was being reenacted in the United States after we went off the gold standard, adopted a welfare state, and pursued world war. 

“The spending for non-productive public works, for the bureaucracy, and for the army, led to excessive taxation, inflation, and the ruin of the essential middle class and its leaders,” Haskell writes in the preface.

The book proved to be a bestseller at the beginning of World War II.

The latest book is Are We Rome?  The Fall of an Empire and the Fate of America, by another journalist, Cullen Murphy, published in 2007 by Houghton Mufflin. 

He answered, “Are we Rome?  In important ways we just might be.  In important ways we’re clearly making some of the same mistakes” (p. 206). 

Benefiting from Roman Traditions

It’s worth pointing out that America has drawn upon many Roman traditions.  I have a book entitled “Why We’re All Romans,” by historian Carl J. Richard.  He notes the following:  We use the Roman alphabet (rather than Greek, Chinese or Arabic).  Our months of the year, from January to December, are Roman.  July is named after Julius Caesar, August from Caesar Augustus.  Christmas grew out of an ancient Roman pagan festival honoring the agricultural go Saturn.  Most of the most influential Christian philosophers, including St Paul and Augustine, were Roman citizens.  The Bible was translated in the Latin Vulgate, and Latin was the official language of the Catholic mass until the 1960s. 

Fortunately, the West rejected the cumbersome Roman numerals and replaced them gradually with the far more productive Arabic numerals.  Ah, the benefits of cultural appropriation! 

The founders adopted many aspects of Roman law and politics, and the early years of the Roman republic were an inspiration to the American Constitution.  We have a Senate representing an upper-class group of legislators, and an assembly elected by the people (House of Representatives).  Rome and the United States share the symbol of the eagle (but so did the Nazis).  Our government building and Capitol are often an imitation of Roman architecture. 

The Rome That We Admire

The founding fathers were familiar with the history of the Roman empire and often sought to imitate their good traits.   

There are aspects of Roman leadership that we greatly admire, such as their building of their roads, bridges and aqueducts.  At the height of the Roman Empire, they had 370 separate highways stretching 53,000 miles, about the length of the US interstate system.  The roads were built to last, paved of stone and iron, and 10 feet deep.  Can we say the same for America’s infrastructure?  Many Roman roads, bridges and aqueducts can still be seen today, an engineering wonder.  How many presidents can say, as Augustus Caesar did, “I found it brick and left it marble”?

We admire the Roman Empire as a gigantic free-trade zone, and even though Augustus Caesar was a dictator, he lived frugally and modestly, and focused on a competent and efficient administration.  

For a period of time, Rome allowed free speech.  Anyone could criticize the emperor as long as he spoke inside the Forum. 

It has been a tradition to write or speak on liberty when visiting the Forum.  In 1854, John Stuart Mill and his wife Harriet visited the Forum and Mill came up with the idea of writing his libertarian tract, On Liberty, published in 1860.  In 1954, Friedrich Hayek followed in Mill’s footsteps and at the Forum decided to write his book The Constitution of Liberty, published in 1960.  Continuing this tradition, in 2009 I wore a toga and spoke freely in favor of “persuasion over force” in the Roman forum. See Persuasion vs. Force – MSKOUSEN.COM

Rome depended on the rule of law based on the Twelve Tables.  The United States created a Constitution that drew upon the ideas of Roman statesmen, including the idea of representative government, checks and balances, a judiciary, and limits (veto power) on our leaders. 

The founders admired the great statesmen, military leaders, orators, and philosophers from ancient Greece and Rome.  George Washington admired Cincinnatus, the Roman general who twice rescued Rome from attack, and each time retired to his farm.  John Adams sought to imitate Cicero, the famous orator, and Cato, the Young, public servants who spent their career battling the likes of Julius Caesar.  “Pushed and injured and provoked as I am, I blush not to imitation the Roman [Cicero],” said Adams.    

King George III was compared to Julius Caesar.  “We will have no Caesars in this country!” declared Benjamin Rush. 

One of the purposes of the US Constitution was to contain the power of ambitious and avarice leaders.  Benjamin Franklin warned, “We see the revenues of princes constantly increasing, and we see that they are never satisfied, but always in want of more.  I am apprehensive, perhaps too apprehensive, that the government of these states may in future times, end in a monarchy, and a King will sooner be set over us.” 

Lessons from Rome’s Mistakes

What lessons can we learn from Rome’s decline and fall? 

The founders saw that ancient Rome had no succession plan.  During the 2nd and 3rd centuries, 23 emperors were murdered.  It was always uncertain who would take their place.  The American founders provided a way to get rid of bad rulers through the impeachment process, and if a president died in office, to replace him with the vice president. 

Ancient Rome had a constitution based on a powerful devotion for centuries to custom, precedent and consensus, but which was not written.  That make it easier for an overzealous politician to bent the rules or simply disobey them.  For centuries Rome had two consuls running the government who were elected each year, and there were term limits.  But at the end of the Republic, ambitious generals ignored this tradition and sought to become dictators for life. 

This was one reason the founders insisted on a written constitution, although even then we know how easy it is to get around it. 

Historians point to over 200 reasons for Rome’s fall.  Rome destroyed itself internally and externally. Gradually its citizens became rich and decadent, demanding more free benefits from the government.  “Bread and circuses” were the rallying cry.  The welfare program offered free grain, olive oil and wine, and eventually eliminated a means test so that everyone qualified. 

Internally, the growing and expensive welfare state destroy not only destroyed the character of the Roman citizens, but its fiscal sanity.  The welfare state led to confiscatory taxation, excessive debt, inflation, and wage-price controls.  

We Americans are no fans of excessive government bureaucracy that Rome was famous for – tax collectors, administrators and soldiers were all a drain on the economy, and eventually leading to runaway inflation (coin clipping), and draconian wage and price controls edict under Diocletian in 301. 

Ancient Rome was also done in by costly foreign wars.  Just as Rome spread itself too thin around the ancient world, today the United States has 2.5 million troops stationed at over 700 bases in sixty countries. 

Will America split in two like Rome did into East (Constantinople) and West (Rome)? 

Mindful of these destructive policies in ancient Rome, our founders created the US Constitution to reduce the chances that America would follow the same fate.  Unfortunately, the Constitution can only do so much. 

As a student of history, I conclude that it is premature to say America is destined to collapse like the Roman empire.  But we are headed in that direction.  We are in many ways in decline.  Certainly China – the most serious threat to America’s dominance as the world’s #1 military and economic prowess – believes that the West is in decline and is doing everything in its military and economic power to take its place and achieve world domination by 1949, the 100th anniversary of the Communist takeover of China, what President Xi Jinping calls “the long game.” 

To summarize my view, I’m reminded of the story of a young man who approached Adam Smith, the venerable professor of moral philosophy at Glasgow University, and author of “The Wealth of Nations.”  The young man informed Dr. Smith that the British had lost to the Americans at Sarasota in 1777, a turning point in the War of Independence, and declared, “We are lost!”  To which Adam Smith replied, “There is much ruin in a nation.” 

There’s a great many good people residing her in America; let’s not sell America short. 

But let us not be blind to our growing problems.  We are in the early stages of decline, but there is no reason why we can turn things around.  All we need to for good men and women to fight for our rights and our liberties.  To quote a line from Shakespeare’s Caesar, “The fault, dear Brutus, is not in our stars, but in ourselves.” 

Interestingly, the first Roman king was named Romulus.  Fittingly, a thousand years later, the last emperor of Rome was also named Romulus.  So beware if we have a future president by the name of Washington. 

Filed Under: Articles, Featured Post, FreedomFest, Main Tagged With: Are we Rome?, Economics, FreedomFest, FreedomFest 2013, Mark Skousen

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