Via No need to panic about GDP | Anthony Evans | Comment is free | guardian.co.uk :
GDP doesn’t tell us how economic activity affects living standards. It fails to distinguish between a bubble and sustainable growth. It doesn’t forewarn about inflation. And perhaps most importantly – it doesn’t help the average person on the street know whether they’re more likely to become unemployed. After all, declining incomes actually increase the demand for many types of goods and services, which is why plenty of workers are prospering in the downturn. As the old saying goes, statistics are like bikinis – what they reveal is interesting, but what they conceal is critical. And macroeconomic aggregates are more of a full Victorian bathing suit.
The industry built around forecasting gives economics an aura of scientism that is destined to disappoint. A narrow focus on statistical releases can blind us to the bigger picture. The crisis isn’t just a failure of monetary policy, but a failure of the monetary regime.