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Supply Chain Business Still Growing: Recession Fears May Not Pass GO

September 29, 2022 By Ned Piplovic Leave a Comment

Gross Output

Washington, DC (Thursday, September 29, 2022): Today, the federal government released gross output (GO) – the measure of total spending in the economy – for the second-quarter 2022. Inflation-adjusted real GO increased 1.6% in the second period 2022. While this marks a fifth consecutive period of declining growth rates in the aftermath of sharp rebound following a pandemic-driven 40% drop in Q2 2020, the current growth rate is back to historically average levels.

In addition to returning to its “normal” range, the real Gross Output growth rate was higher once again than the real GDP, which contracted another 0.6% in Q2 2022, after declining 1.6% in the first period of the year. Furthermore, after trailing the GO growth rate over several recent periods, the Adjusted Gross Output (GO*)[1] expanded 2.0% this quarter.
In nominal terms, second-quarter 2022 GDP expanded 8.2% and GO grew 12.5%. 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 12.8% in Q2 2022. The difference between net and gross figures amounts to more than $11 trillion, which is missing from the government’s official GO figure, but we include it in our Adjusted GO measure.

GO Predicts Slow Growth, No Recession

First-quarter 2022 GO expanded at a higher rate than GDP as well, which generally indicate a positive outlook for the next-quarter GDP. With another period of GO advancing ahead of the declining GO in Q2 2022, we should expect positive GDP growth results when the Bureau of Economic Analysis (BEA) releases its third-quarter 2022 advance GDP estimates on October 27.

While our GO model has proven reliably accurate in projecting next quarter’s GDP direction under normal economic circumstances, several extraordinary still lingering from pandemic-related issues, such as continued supply-chain shortages, inflation, or rising interest rates, can cause minor deviation in the model.

Nevertheless, another factor for optimism about GDP growth in the next period is the continued and steady increase in business-to-business (B2B) spending, which continues to outpace consumer spending in real terms. This is an indication of the business sector’s confidence that the economy should sidestep a recession and should be on its way to a satisfactory recovery, as opposed to a severe recession projected just a couple of periods ago.
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.

“GDP is the X-ray of the Economy; GO is the CAT-Scan”

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. According to Steve Forbes, GDP is the X-ray of the economy; GO is the CAT-scan.
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.”
Mark Skousen, who holds the new Doti-Spogli Endowed Chair of Free Enterprise at Chapman University, concludes, “GO gives a more complete picture of the economy; it is the missing piece of the macroeconomic puzzle.”
Recession or No Recession?
The sharp economic decline in the second quarter 2020 compelled many economists to predict marginal growth and substantial economic downturn over an extended period following the initial COVID pandemic breakout. However, the steep one-period drop in the second-quarter 2020 appears to have been merely 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 – not an indicator of long-term economic slowdown.
Another indication that the economic pullback in 2020 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.

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 second-quarter 2022, nominal B2B activity rose 13.4% on an annualized basis to reach $34 trillion. This B2B growth in nominal terms lagged slightly behind consumer spending expansion, which increased 14.2% and reached $17.3 trillion in the second quarter. However, in real terms B2B expenditures grew 3.15%, more than triple the 0.9% real consumer spending growth.

“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 third-quarter 2022 GDP on October 27, 2022. The full release of Gross Output data and the third estimate of GDP are scheduled for December 22, 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, all but one sector and most subsectors of the economy expanded in Q2 2022.

Following a 43% annualized growth in the last-quarter 2021 and another expansion of 40% in the first-quarter 2022, the Mining sector delivered an annualized upsurge of 37.2% in nominal terms. While all three subsectors – Oil and Gas Extraction; Mining, except Oil and Gas; and Support Activities for Mining – expanded, the sector growth was driven primarily by the Oil and Gas Extraction segment, which benefited from high oil prices. The mining sector is small, and accounts for 2.1% share of the overall economy as measured by Gross Output. However, the sector represents one of the earliest stages of production. Therefore, we keep an eye on the expansion and contraction of the Mining segment, which can be an early indicator and a good predictor of which direction other sectors further down the supply chain might be headed in subsequent periods.

With a 1.4% share of the overall economy, the Agriculture sector is another small-share segment in the early stages of production that can be used as an early indication of future movements in the overall economy. After contracting 1.3% in the last period of 2021, the Agriculture sector expanded for the second consecutive period and delivered a 13.1% expansion in Q2 2022.

After reversing two periods of marginal growth with three quarters of double-digit growth, Manufacturing – the second largest segment of the economy with a 16% share of the economy – increased nearly 17% in Q2 2022.  Nondurable Goods increased 14.9% and Durable Goods Manufacturing expanded 18.7%.

Additionally, the Construction sector, which accounts for nearly 5% of the economy, followed up two periods of double-digit growth with an expansion of 11.7% in Q2 2022. The Retail and Wholesale trade sectors continued their above-average growth over the last few periods by expanding in the second period 2022 5.7% and 5.6% respectively.

Finance, Insurance, Real estate, Rental, and Leasing are the largest segment that accounts for nearly 18% of the economy. After expanding over the previous two periods, the segment contracted 2% in Q2 2022. While the Real Estate, Rental, and Leasing subsegment expanded at a healthy rate of 11.5%, it was unable to overcome the contraction of nearly 19% by the Finance and Insurance subsegment, which drove the overall segment slightly negative for the period.

While contracting nearly 6% in Q2 2020 amid the economic shutdown, Government has been expanding at record rates. Not only has it been expanding, but the expansion rates have accelerated over the last three periods, After growing 6.1% and 8.2% in Q4 2021 and Q1 2022, respectively, total government spending increased by more than 21% in the second-quarter 2022,

Over the past few periods, spending at the State and Local levels tended to outpace spending at the federal level by a two-to-one margin. However, in Q2 2022 spending at both levels expanded at similar rates. While Federal government expanded 21%, State and Local government spending expanded 21.4% in the second-quarter 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

For a complete analysis of GO, go to https://www.grossoutput.com/gross-output/

Mark Skousen, “Recession Fears May Not Pass GO: GDP is Slumping, but There’s a Better Way to Gauge the Economy.” Wall Street Journal, August 11, 2022: Recession Fears May Not Pass GO – WSJ 

If you are not a WSJ subscriber, you can read a copy of the article on: https://www.grossoutput.com/2022/09/12/recession-fears-may-not-pass-go/

 

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 second quarter is nearly $46 trillion. By including gross sales at the wholesale and retail level, the Adjusted GO (GO*) expands to more than $57 trillion in Q2 2022. Thus, the BEA omits more than $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

Recession Fears May Not Pass GO

September 12, 2022 By Ned Piplovic Leave a Comment

GDP is slumping, but there’s a better way to gauge the economy.

By Mark Skousen

Originally appeared in the Wall Street Journal on Aug. 10, 2022 and on wsj.com

 

How can the U.S. be in a recession when the number of jobs is growing at a healthy clip? According to the National Bureau of Economic Research, two consecutive quarters of declining real gross domestic product is enough for a recession. The Bureau of Economic Analysis (BEA) reported just that—real GDP declined at an annual rate of 1.6% in the first quarter and 0.9% in the second.

But a host of statistics suggest that the economy is still growing, not the least of which is last week’s robust jobs report and unemployment rate. While the Conference Board’s leading economic indicator suggests a mild recession may be on the way, it reports: “The coincident economic index which rose in June suggests the economy grew through the second quarter.”

The BEA also produces a statistic called gross domestic income, which adds up wages, profits and other income. Theoretically it should align with GDP, but it no longer does. Real GDI rose 1.8% in the first quarter, and is expected to have risen slightly in the second quarter (the official number will be announced on Aug. 25). Economists have noted the unprecedented gap between GDP and GDI. The BEA uses different surveys to come up with GDI, but the growing gap can’t be explained by a statistical “discrepancy.”

In addition, the relatively new statistic gross output, or GO—which measures spending at all stages of production, including the supply chain—rose at an annual rate of 2% in real terms in the first quarter. Second-quarter GO won’t be released until Sept. 29.

Why is GO a better measure of the economy than GDP? Because GDP has a serious flaw—it leaves out the supply chain. It accounts for final output only, finished goods and services bought by consumers, business and government. Intermediate production—all the goods in process along the way—are ignored.

That means that GDP only measures about 44% of economic activity. According to the BEA, intermediate production amounted to $19.5 trillion in the past year, compared with $24.8 trillion GDP. For technical reasons, that former figure leaves out an additional $11 trillion of wholesale and retail trade.

For several years, I’ve championed GO as the “top line” in national income accounting and a better snapshot of the economy. Many economists consider it a better, more comprehensive measure than GDP. The biggest drawback is the BEA’s delays in releasing GO two months after the initial estimates of GDP.

For decades, publicly traded companies have released their earnings reports every quarter, reporting sales (top line) and earnings (bottom line) at the same time. The federal government should do the same. It’s time national income accounting caught up with the accounting profession.

Mr. Skousen holds the Doti-Spogli chair in free enterprise at Chapman University, is editor of Forecasts & Strategies and author of “The Structure of Production.”

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

Are economists the slowest learners?

September 3, 2022 By Mark Skousen Leave a Comment

Dear friends of freedom,

Peter Drucker once said, “Economists are the slowest learners.”

I never believed that….until now.  See the announcement below from the American Economic Association.

I was very much looking forward to attending and maybe even speaking at the AEA meetings January 6-8, 2023, in New Orleans, a city I love, but was astonished to read of the draconian rules the AEA leadership have established–vaccines/boosters and N-95 masks!  Give me a break!

They wrote today:  “All registrants will be required to be vaccinated against COVID-19 and to have received at least one booster. High-quality masks (i.e., KN-95 or better) will be required in all indoor conference spaces. These requirements are planned for the well-being of all participants. Participants are also encouraged to test for COVID-19 before traveling to the meeting.”

Seriously?  This isn’t 2020 — it’s nearly 3 years later and I don’t know anybody except the AEA living in utter fear.  Everyone else is getting back to normal, and recognizing that everyone is going to be exposed to various viruses.  I got vaccinated, wore masks, etc., and still got Covid.  So have millions of others.  It’s time to move on.

By the way, my wife had a severe allergic reaction to the jab  — she will NEVER take another Covid-vaccine or booster. There are thousands of others who feel the same way.

Meanwhile, we can fly to New Orleans, we can teach and attend college classes, we can go to numerous socials and events without wearing masks or getting vaccinated — but no, the high and mighty AEA authoritarians are mandating we wear masks and get vaccinated–again!

I called the Hilton Riverside and asked if they have any such mask or vaccine mandates.  They said “none.”

I will be speaking at the New Orleans Investment Conference at the Hilton Riverside on October 12-15, and the conference organizers are not mandating masks or vaccines — even with thousands attending.  Are they stupid people?  I don’t think so.

I am also speaking at the World Knowledge Forum (the Asian version of Davos) on September 20-22 in Seoul, Korea, and they have no mask/vaccine mandate.

I will be attending the Mont Pelerin Society meetings in Oslo, Norway, and they don’t have any such mandates.

It’s time that the AEA leadership start treating us as grown-ups and let us allow us to decide for ourselves whether to wear a mask or get vaccinated.  Some people feel safer wearing masks and that’s okay.  But don’t force all of us to wear them, or to get vaccinated.

So, sadly I will NOT be coming to New Orleans in January, and I will encourage other economists to protest with me.

Best wishes, AEIOU,

Mark

Mark Skousen
Presidential Fellow and Doti-Spogli Endowed Chair of Free Enterprise, Chapman University
Newsletter:  www.markskousen.com
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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

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]

# # #

________________________________________

[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

Richard Rahn Reviews “The Making of Modern Economics” by Mark Skousen

March 29, 2022 By Ned Piplovic Leave a Comment

Richard W. Rahn — economist, syndicated columnist and entrepreneur — reviewed the most recently updated fourth edition of The Making of Modern Economics by Mark Skousen.

Here is the full review originally published in The Washington Times, on March 28, 2022:

ECONOMISTS ARE STRANGE PEOPLE

Mark Skousen’s Making of Modern Economics Gives Us Good Insight into Their Mindset

 by Richard W. Rahn

Would you take a college seriously if some geography department professors argue that the world was flat, or a medical school where some professors argue that the way to cure “a fever” is to bleed the patient (as was done to George Washington)?

Yet, we have a world in which many colleges have so-called professors of economics who argue for socialism, price controls or for virtually unlimited government spending, government-created money or no limits to tax rates. If their ideas were merely contained in the academy, it would not be so bad; instead, they are taken seriously by the ignorant in the media and the political establishment.

Before 1776, there were no people who referred to themselves as economists, nor was there an academic field known as economics — even though now it is one of the most popular college majors. Despite its recent vintage, the field of economics has a widely agreed-on founding father — Adam Smith (1723-1790) — who was a professor of moral philosophy at the University of Glasgow in Scotland.

Up to the 1700s, per capita incomes had barely changed from the time of recorded history; and Thomas Hobbes correctly noted the life of man was “solitary, poor, brutish, and short.” The industrial revolution began in England with the invention of the steam engine, which would free mankind from physical drudgery. The evolution of private property rights in England had started with the Magna Carta of 1215, enabling the widespread accumulation of capital and its productive investment. The Scottish Enlightenment was well underway, emphasizing rational thought and personal and economic liberty.

Smith was a key figure of the Enlightenment who was influenced — and vice-versa — by his close and older friend David Hume and by his American contemporary Benjamin Franklin, whom he met during Franklin’s stays in England and France. Despite the immense changes in the economic order, no seminal work had been published on it until Smith’s “An Inquiry into the Nature and Causes of the Wealth of Nations” in March 1776 (246 years ago this month). The amazing thing is Smith was correct in almost all of his observations and policy recommendations, including the importance of free trade and free markets and competition in allowing the common man almost unlimited opportunity for a better life.

In the two and half centuries since “Wealth of Nations,” many others have made worthwhile contributions to economics, while not an insignificant number have been wrong but appealing, causing great misery. Fortunately, Mark Skousen has just published the 4th edition of his great book, “The Making of Modern Economics: The Lives and Ideas of the Great Thinkers.”

Mr. Skousen has produced the single best book on virtually all of those who have had a significant impact on the field of economics — for good or bad — regardless of their political leanings. Despite being an economist with a definite political viewpoint, he treats the many figures he covers with considerable fairness — even the bad actors. Mr. Skousen presents the pros and cons of his subjects’ contributions to the field in a clear, understandable language. He also describes many of their eccentricities, including sex scandals not usually associated with a profession considered dull by those who have only met the run-of-the-mill economist.

Several notable economists like Thorstein Veblen (1857-1929), best known as the author of “The Theory of the Leisure Class,” were totally disagreeable people. Veblen despised both capitalists and Marxists, and most everyone else, and was often slovenly or worse in his appearance — but had the redeeming quality of being highly provocative.

Frederic Bastiat (1801-50) was a French essayist and economist, who is best known for his clever parables destroying economic fallacies, such as the “petition of the candlemakers” and the “broken window theory.” As Bastiat wrote: “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect, and the good economist takes into account the effect that can be seen and those effects that must be foreseen.”

Milton FriedmanMuch of the struggle in economic thought in the 20th century can be understood in the rise of John Maynard Keynes (1883-1946) and his disciples, notably Paul Samuelson (1915-2009), and their subsequent fall. This was mirrored by the fall and subsequent rise of F.A. Hayek (1899-1992), an early contemporary of Keynes, and the rise of Milton Friedman (1912-2006), a contemporary of Mr. Samuelson.

Despite their brilliance, neither Keynes nor Samuelson had as good a grasp of the unforeseen as did Hayek and Friedman.

The new 4th edition of Mr. Skousen’s book takes the reader up through the pandemic and the rise of cryptocurrencies. Mr. Skousen is better known as an economic entrepreneur (he is the creator of the annual FreedomFest attended by thousands in Las Vegas), than as an academic, despite having taught at several universities, and is now an adjunct professor at Chapman University. He is also the author of many books, including several textbooks.

Few know who the great economists were and what they contributed. Mr. Skousen has done the world a favor by producing a book that is a delight to read cover-to-cover or as a reference given its detailed source notes.

  • Richard W. Rahn is chairman of the Institute for Global Economic Growth and MCon LLC.

Originally posted on: https://www.washingtontimes.com/news/2022/mar/28/economists-are-strange-people/

© Copyright 2022 The Washington Times, LLC.

*       *       *

Making of Modern Economics

The new 4th ed of “The Making of Modern Economics” is available at 40% off the retail price — only $35 — by going to www.skousenbooks.com.

https://skousenbooks.com/ols/products/the-making-of-modern-economics

Filed Under: Articles, Featured article, Main Tagged With: Making of Modern Economics, Skousen

Emma Rothschild on Gross Output

March 28, 2022 By Mark Skousen Leave a Comment

Dear friends,

Many of you know about my singular contribution to economics, the development of gross output (GO), the new statistic that measures spending at all stages of production, including the supply chain. I call it the “top line” in national income accounting, and GDP the “bottom line.”  

Good news! I received a surprise letter from Harvard economist Emma Rothschild, who is married to Amartyr Sen, the Nobel Prize winner. She has cited my work on GO in a footnote of her recent article “Where is Capital?” published in the journal “Capitalism: A Journal of History and Economics.” She said that her paper is “essentially an attempt to apply ideas about gross output to the economic history of the industrial revolution.” See her quote below.  

It’s great to see how this broader measure is gaining traction among top economists.   

Having experience in the business world, I’ve always found that treating “capital investment” as final capital goods only is incomplete, and we need to apply the businessman’s perspective — that business has to fund all capital expenditures, including the purchase of supplies in the supply chain, to move the production process along and make a profit. Hence the move toward a measure of total spending at all stages of production, or GO. As Sir John Hicks wrote in his book, “Capital and Time: A Neo-Austrian Theory” (1973), measuring GO is “the typical business man’s viewpoint, nowadays the accountant’s viewpoint, and in the old days the merchant’s viewpoint.” (p. 12) 

Here is Prof. Rothschild’s perspective:  

 

Where is Capital? 

by Emma Rothschild 

Capitalism: A Journal of History and Economics University of Pennsylvania Press 

Volume 2, Number 2, Summer 2021 pp. 291-371  10.1353/cap.2021.0015 

https://muse.jhu.edu/article/798746 (login required)

“The idea of gross output—or output to intermediate as well as final use—is of some ideological importance in contemporary economic policy. Gross output is seen as a measure of economic life that is business-centered, and that identifies businesses, rather than government or consumers, as the principal object of economic inquiry.143 But business is important, too, in our own inquiry into economic history. In our microscopic view of exchanges or transactions, there are multiple exchanges between one enterprise and another, and the exchanges embodied a substantial proportion of the technologies associated with new industries. A little over 40 percent of all output is sold to intermediate use in the contemporary United States, and the proportion was undoubtedly much smaller in the advanced economies of the late eighteenth century. It was relatively high, all the same, in the most modern industries, including those selling intermediate-type materials to the “final” demand of exports and government: 

Footnote 143: The recent policy discussions are surveyed in writings by Mark Skousen, including https://mskousen.com/2020/10/macroeconomics-on-the-go-how-wall-street-economic-analysts-use -gross-output-go-2/; and see, on the importance of ‘B2B’ or business-to-business spending, ‘Business not Consumers Drives the Economy,’ https://mskousen.com/category/gross-output/.”

Best wishes, AEIOU,
Mark
Mark Skousen
Presidential Fellow, Chapman University
Newsletter:  www.markskousen.com
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Personal website:  www.mskousen.com
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Filed Under: Main

Gary North, R. I. P.

February 28, 2022 By Mark Skousen 2 Comments

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

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ANNOUNCING A NEW EDITION BREAKTHROUGH COURSE IN FREE-MARKET CAPITALISM

“Mark Skousen is America’s leading economic author because he roots his luminous … [Read More...]

Gross Output

RAPID GROWTH IN 1ST QUARTER GO: ECONOMY IS NOT SLOWING DOWN

By: MARK SKOUSEN Washington, DC (Wednesday, July 26, 2017): Gross output … [Read More...]

GROSS OUTPUT AND B2B INDEX ADVANCE SHARPLY AFTER ELECTION

Washington, DC (Friday, April 21, 2017): Gross output (GO), the top line of … [Read More...]

SECOND QUARTER GROSS OUTPUT AND B2B INDEX INCREASE, STILL NO SIGNIFICANT GROWTH OF THE U.S. ECONOMY.

By Mark Skousen Washington, DC (Thursday, November 3, 2016):  Gross output, … [Read More...]

FIRST QUARTER GROSS OUTPUT AND B2B INDEX POINT TO NEGLIGIBLE GROWTH OF THE U.S. ECONOMY

Washington, DC (Thursday, July 21, 2016):  U. S. economic activity is still … [Read More...]

HOW BEN FRANKLIN SAVED THE POST OFFICE AND HELPED UNIFY AMERICA

By Mark Skousen Special to the Franklin Prosperity Report July 4, … [Read More...]

FreedomFest Fun Activities

In addition to all the great debates, presentation and hundreds of vendors in … [Read More...]

Big news: the Bureau of Economic Analysis (BEA) has changed its definition of GDP that starts with Gross Output.

This is a significant breakthrough, which I have encouraged them to do for some … [Read More...]

FOURTH QUARTER GROSS OUTPUT AND B2B INDEX POINT TO BUSINESS RECESSION

By Mark Skousen April 21, 2016 Washington, DC (Thursday, April 21, 2016):  … [Read More...]

CATO INSTITUTE POLICY FORUM: “GO Beyond GDP: What Really Drives the Economy?”

We hear constantly that consumer spending is 70% of GDP and that consumer … [Read More...]

ANNOUNCING THE NEW THIRD EDITION OF “THE MAKING OF MODERN ECONOMICS” BY MARK SKOUSEN

March 9, 2016: Today marks the 240th anniversary of the publication of “The … [Read More...]

Announcing the New Third Edition of “The Structure of Production”

Federal Government Introduces a New Macro Statistic: A Triumph in Supply-side … [Read More...]

My Friendly Fights with Dr. Friedman

The Rational, The Relentless - Liberty Magazine - September 2007 by Mark … [Read More...]

The Making of Modern Economics

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