An Economist Explains Why The 1.4% GDP Decline Is Misleading Many people were struck by the 1.4% drop in Gross Domestic Product or GDP in the first quarter of 2022, with some reports suggesting this was the beginning of a recession. That is not the real story of the first quarter GDP. Instead, it looks like economic growth is continuing at a healthy rate. How can that be? To understand this point, it is important to recognize how imports are counted in GDP, since the increase in imports subtracted 2.53 percentage points from GDP growth in the quarter. In short,…
Author: Dean Baker
Dean Baker
Dean Baker co-founded the Center for Economic and Policy Research in 1999. His areas of research include housing and macroeconomics, intellectual property, Social Security, Medicare and European labor markets. He is the author of several books, including "Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer."
This Isn’t — and Can’t Be — 1970s style inflation A popular line on our recent surge of inflation is that an over-tight labor market has led to rapid wage growth, which in turn forces companies to raise prices. Higher prices in turn lead workers to demand higher wages, which will give us a wage-price spiral and soon lead to double-digit inflation. While this was a story that plausibly fit the data in the 1970s, it is very hard to make the wage-price spiral fit the current situation for a simple reason: The wage share of income has fallen sharply…
Expensive Government Actions That Rarely Make The News Corporations hold enormous political power on the obscure issues that almost no one follows but nonetheless have an enormous impact on our economy. For example, the pharmaceutical industry has vigorously pushed for longer and stronger patent protection to increase its monopoly profits. As a result, the amount we pay for prescription drugs has risen from 0.4% of the economy in 1980 to more than 2.2% of Gross Domestic Product today. The difference comes to $400 billion a year or more than $3,000 per family. You could think of that as a car lease payment silently drained…
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