GDP is defined as the monetary value of all the finished goods and services produced within a country's borders in a specific time period. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. So GDP then is really just a measure of economic activity within a nation's own borders. But what does that really tell us about the health of an economy? After all, GDP was growing up until the financial crisis of 2008 (it first contracted in the 3rd quarter of 2008). Well, this is because although GDP can tell us plenty about the extent of economic activity, it tells us absolutely nothing about the quality of that activity, and thus the sustainability of that very growth. The housing bubble, after all, was great for home builders, banks and retailers, but it turned out to be a really bad investment for the economy that blew up as a global financial crisis after only a few good years of partying on cheap credit.
To Watch full episode of Capital Account with Lauren Lyster check out
Follow Lauren on Twitter: