The most basic and comprehensive measure of the U.S. economy is gross domestic product, or GDP. It’s a measure followed by investors, economists, and policymakers like the president of the United States.But GDP may be failing to capture and communicate the impact of technology.
Jim McCaughan, CEO of the $425 billion asset management firm Principal Global Investors, tells Yahoo Finance that new technology has disrupted old industries and made our lives easier, but it could also be driving errors in how we measure our economy.“[The] implementation of technology has really accelerated in recent years. You have everything from social media to WiFi to artificial intelligence, machine learning, automation. Those trends have really increased and are having a very big effect on the economy,” McCaughan says. “If you think about what they do, they tend to make things cheaper and function better.”
Technology is enabling businesses and consumers to do a lot more, which seems intuitive. However, we’re able to do a lot more but also at a lower cost. This complicates metrics like GDP because they are measured in dollars.