The gist:

Measure what matters to the Northwest by paying attention to trends such as poverty and median income as carefully as track the latest GDP.


In both the US and Canada, gross domestic product, or GDP, is reported quarter by quarter. So timely is GDP reporting—and media attention to GDP reporting—that it has come to be almost seen as equivalent to “the economy.”

But GDP is a flawed indicator, as we detail in This Place on Earth 2002. It fails to distinguish between losses and gains, because it only adds and doesn’t subtract. Gutting ecosystems for commodities—and leaving fisheries depleted, forests cleared, or rivers dammed—shows up as a plus in the accounts. So do expensive misfortunes: Whether money is spent on vacations or hospital stays, playground equipment or car wrecks, births or funerals, it’s all the same in the GDP ledger.

Other measures of progress, on the other hand (which we describe in our Cascadia Scorecard indicator), are reported much less frequently, and receive much less attention. For example, we must wait a year, or sometimes two, for the most recent annual poverty rates and average incomes to be reported, especially at the state, provincial, and local levels.

With so little information about poverty and incomes, we tend to overlook the importance of the economy’s effect on ordinary people. By the time the numbers are finally released, they are usually outdated and hedged by statistical uncertainty. So lacking better measurements, we turn to abstractions like GDP.

It’s both possible and important to report poverty, income, and other important statistics in a more timely and precise fashion. Government agencies already canvas households on a monthly basis.

By expanding the survey sizes for local areas and analyzing the data more quickly, northwesterners could have access to recent and precise tallies of poverty and income trends. These are trends that reveal a true picture of the economy’s real-world effects and that should inform the way we structure economic policy as much as the latest GDP figures.

March 7, 2006