It is 7:30 a.m. in washington and a bevy of reporters files into the Department of Commerce, which is kitty-corner from the Treasury. They take their seats, and the door is locked behind them. For the next hour, no one can go in or out. An official from the Bureau of Economic Analysis distributes the latest GDP estimates—that’s Gross Domestic Product—and answers questions. Then the reporters get an hour to file their stories.
This monthly event is called the lock-up, and in most times it is a metronome in the cycle of Washington economic news. The GDP is essentially a tally of the money that Americans spend over a given period. In a commercial culture, such transactions are alpha and omega, and the GDP updates are like utterances from the oracle. Amid the market turmoil that besets the country as I write, the GDP will loom as a harbinger of good times or bad.
The resulting stories have a strange combination of opacity and authority, a journalistic equivalent of the Latin mass. The specifics vary, but the script remains pretty much the same. There are upticks and downturns. Growth is robust or anemic, exceeds expectations or disappoints them. That is the story, in its Mr. Potato Head variations, along with portentous comment from those ubiquitous Wall Street analysts whose institutional interest in spinning the numbers somehow goes without mention.
Critics have noted how adjustments to the GDP over the years have tended to make the figure more propitious. But my concern here is more basic. Beneath the fixation upon GDP is a single assumption: an increase in spending will be cause for celebration. “Sluggish” growth, by contrast, will provoke alarums and demands for policy purgatives and stimulants to get things moving again. This is the master narrative, and it makes no difference what the “growth” consists of, or who gets what portion of it, or the effects. Reporters embrace an abstraction as economic reality. Product—as in gross domestic—becomes a theological concept, a metaphysical absolute, rather than a statistical lump that has to be broken down into specifics before anyone can say what is going on.
Thus the news accounts on May 1 of this year of the Commerce Department release the previous day. The economy “continued to stagnate,” The New York Times reported. Consumer spending was up just 1 percent over the previous quarter, and in the prevailing script, this must mean that life is getting worse.
But wait—what is this? On another page of the same edition, the Times reported that American mothers are breastfeeding more and using formula less. This is good news for babies. By most accounts, mom is the best source of sustenance, emotionally as well as physically. Yet there is a problem. Americans spend somewhere between two and three billion dollars a year on infant formula. To the economic mind—the one embedded in the GDP—a drop in sales for formula makers could mean “the economy” is in decline. mothers’ milk threatens economy—newspapers wouldn’t run such a headline. But it’s implicit in their take on “growth.”
The disconnect between “the economy” of statistical abstraction and the one that people actually live in is a recurring if unrecognized theme. On the front page of the Times that same day, alongside the GDP story, was another on how Latino immigrants in the U.S. were remitting less money to their families back home. The money not sent will boost spending here, but that just means more poverty in Mexico. The Times ran another story that day on how Asian Americans were buying rice in large quantities, for fear of looming shortages. The quarterly GDP figures will get a boost, but it’s not the cheery prospect that such upticks typically suggest. And so it goes. In recent months there have been reports of Americans growing more food in their gardens, walking more, and burning less gas. All of these send the official economy downward, even as Americans often experience them as gains in well-being.
By the same token, expenditures for credit-card interest, obesity medications, gambling, disaster cleanups, even price gouging and fraud are included in the tally of what the media report as economic advance. Car crashes, cancer, and divorce must be economically auspicious because they cost so much. BusinessWeek reported recently that Americans pay at least $1 billion a year through an illegal medical-billing practice called “balance billing” that makes them pay what insurance companies don’t. If you are among those so gouged, then congratulations. You are helping the economy to “stagnate” a little less.