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GDP doesn't count all "economic activity." Otherwise, HFTs would cause GDP to explode. It doesn't account for the cost of construction either because that's an
by Aunche 3y ago
GDP doesn't count all "economic activity." Otherwise, HFTs would cause GDP to explode. It doesn't account for the cost of construction either because that's an intermediate cost. Even home sales aren't counted because they're considered an investment. GDP only considers the value of the final consumed goods and services, and rent is a consumed service. If you're a homeowner, they estimate your rent and use that instead.
- Dylan16807 3y ago> GDP doesn't count all "economic activity." Right, which is why the insult in the post I quoted is getting things very wrong. > GDP only considers the value of the final consumed goods and services, and rent is a consumed service. If you're a homeowner, they estimate your rent and use that instead. I understand that but it's a notably flawed way of going about it. Prices in general can have a loose coupling to value but with rent it's extra bad. A small change in housing stock can trigger a massive swing in rent and GDP even though the service being delivered doesn't change.