FORGET GDP: Here's the new way Wall Street is measuring the US economy
By Myles Udland
GDP, or gross domestic product, is the most widely-cited measure for the economy's overall health and trajectory. On Friday, we found out that the second estimate of GDP in the first quarter showed that the economy actually contracted 0.7% to start 2015.
But a number of Wall Street economists pointed to GDI, or gross domestic income, as giving us a better picture of what's really going on out there.
In the first quarter, GDI rose 1.4%.
In a note to clients following Friday's report, Kris Dawsey, an economist at Goldman Sachs, called GDI a "useful cross-check on the often-noisy quarterly GDP figures." Over the prior year, real GDI — which is adjusted for inflation — rose 3.6% in the first quarter, which Dawsey noted is near the top end of the range seen during the post-crisis recovery.
Paul Ashworth at Capital Economics wrote that, "We would view [GDI] as a much more accurate gauge of the economy's true performance over the [first] three months of this year."
And in comments following Friday's report, Jason Furman, Chairman of the White House's Council of Economics Advisors, also highlighted the solid GDI print and noted that starting in July, the Bureau of Economic Analysis will publish an average of GDP and GDI.
This measure showed the economy grew 0.3% to start the year.
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