Today's economics lesson: GDP numbers do not tell the whole story

To clarify a bit, the traditional definition of an economy comes from convenience, but the way it is explained in aggregate terms is when the output (GDP) rises slower than the capacity to produce(growth in the labor force and its productivity). The second one is the more realistic because it takes into account the underperformance of an economy, which leads to unemployment.

For example, if GDP rises 1% but the workforce grows 2% (assuming no change in productivity) the real result is that the additional 1% of those entering the workforce do not have jobs because there is not enough output(which translates to income for households) to employ them.

Generally, the US economy has had long run growth of around 3.5-4% so that is the marker for staying constant with the growth in capacity. We are far below that, while our productivity is not falling and our population rises. Thus, unemployment has been rising for every month of the year.

It's just logical, you have to examine GDP numbers in the context their capacity to see how accurate they are. For instance, I noticed East Timor is the second fastest growing economy in the world in terms of GDP, but then it also has huge population growth and is moving up from rock bottom so its productivity has to rise. The end result is that the standard of living is pretty much the same