Monday, February 06, 2006

Is the Economy Stronger Than You Think?

I'll take a quick break from ranting about the Seahawks losing to the referees in the Superbowl to show my economics geek side. BusinessWeek's chief economist, Michael Mandel, who keeps a pretty interesting blog, has a cover article this week titled "Why The Economy Is A Lot Stronger Than You Think". While I don't agree entirely with his approach, he does bring up some interesting questions. Capital spending on fixed assets, such as drill presses and office furniture, is counted as assets for accounting purposes, and as investment (big "I" for my fellow macro students) for calculating GDP. Spending on R & D and education though, which arguably may be more important aren't. So are we investing and saving less, or are we just doing it in different ways?