Economic indicators are funny things. If you measure the right thing, they can tell you that even in bad times for most Americans that things are going well. In my previous diary, I discussed the great risk shift from multinational corporations to the average American citizen. Now, I would like to take the discussion in a different direction by looking at why we do not notice this great risk shift. One of the reasons we do notice the shift is the use of GDP as the primary indicator for the state of our economy. Indeed, right now, the GDP has begun to grow for the first time in a year. It stands up 3.5 percent.

The problem, however, in the number is several folds. One it does not address job creation, kind of jobs created or wage stagnation/deflation. Two, it does not address what is being left out of the equation, which is the subject matter of this diary. Thus, the GDP is as interesting for what it leaves out as what it  puts into the equation. However, we rarely have that discussion in America. For these reasons, I advocate that we look at the Quality of Life Index to see where our country really is for the bulk of Americans in our economy.

Quality of life indexes are one means by which we can view what is missing from GDP. As I have said before, I am not the biggest fan of Wikipedia, but it is an easier way for the audience to appreciate what the quality of life index measures:

- Health: Life expectancy at birth (in years). Source: US Census Bureau

- Family life: Divorce rate (per 1,000 population), converted into index of 1 (lowest divorce rates) to 5 (highest). Sources: UN; Euromonitor

- Community life: Variable taking value 1 if country has either high rate of church attendance or trade-union membership; zero otherwise. Source: World Values Survey

- Material well being: GDP per person, at PPP in $. Source: Economist Intelligence Unit

- Political stability and security: Political stability and security ratings. Source: Economist Intelligence Unit

- Climate and geography: Latitude, to distinguish between warmer and colder climates. Source: CIA World Factbook

- Job security: Unemployment rate (%.) Source: Economist Intelligence Unit

- Political freedom: Average of indexes of political and civil liberties. Scale of 1 (completely free) to 7 (unfree). Source: Freedom House

- Gender equality: Measured using ratio of average male and female earnings. Source: UNDP Human Development Report"

http://en.wikipedia.org/wiki/Quality-of- life_index

To that I would add equality in general, including on race, sexual orientation, social mobility and economic equality. These things tell us a great deal about the quality of life of economy of a country.

The U.S. ranks 13th on the quality of life index. We are falling behind Europe in social mobility and income equality. We are 38th  or there abouts in terms of health care, a factor that drives as I remember somewhere around 1/5 of our economy in total.

There are other models such as the Prosperity Index:

"The index is based on a definition of prosperity that combines economic growth with the level of personal freedoms and democracy in a country as well as measures of happiness and quality of life."

http://news.yahoo.com/s/nm/20091027/lf_n m_life/us_prosperity_index

France recently has embraced a shift for accounting for GDP by including additional indicators of the state of its economy:

"France's president on Monday urged other countries to adopt proposed new measures of economic output unveiled by a panel of international economists led by Joseph Stiglitz, the US Nobel Prize winner."

http://www.ft.com/cms/s/0/1af2194c-a12f- 11de-a88d-00144feabdc0,dwp_uuid=0e3b4494 -227d-11dd-93a9-000077b07658.html

There are concerns about GDP:

"Increasing concerns have been raised since a long time about the adequacy of current measures of economic performance, in particular those based on GDP figures. Moreover, there are broader concerns about the relevance of these figures as measures of societal well-being, as well as measures of economic, environmental, and social sustainability."

http://www.stiglitz-sen-fitoussi.fr/en/i ndex.htm

This is not a right versus left issue. Conservatives are also concerned with factors that GDP alone does not measure regarding the economic activity of a country.  I may disagree with their scale,but the fact is, it is not the same scale as using simply the GDP model favored by the press and the government.

One of the reasons this matters is that you can have an increasing GDP, and still have a poor economic quality of life. For example, a GDP of 3.5 percent is insufficient to produce jobs or increase security in one's job situation.

Here, is the Economic Policy Institute discussing the situation of jobless recoveries under Bush:

"Underlying this recent slowdown in job growth is a fundamental relationship in economics: the rate of employment growth is, by definition, about equal to the rate at which real gross domestic product (GDP) is exceeding productivity growth. That is, if GDP is up 3% and productivity growth is up 2%, employment growth will be in the neighborhood of 1%."

Adding:

"In this context, our current lackluster job growth is no mystery. Over the past year, real GDP grew 3.5%, about one point faster than the annual growth in productivity. Intuitively, this means the economy has not been generating enough demand to lead employers to significantly expand their workforce (the 1% difference between these two values translates to about 112,000 jobs per month). As long as GDP is growing at about the same pace as productivity, there is little need to add workers to meet consumers' and investors' demands for goods or services."

http://www.epi.org/economic_snapshots/en try/webfeatures_snapshots_20060913/

Thus, if some economists are right in stating that higher unemployment is the "new" normal in the U.S. we need to look at quality of life to determine what impact this is having on our economic situation rather than GDP alone.

"Many economists believe the recession reversed course in the recently ended third quarter and they predict modest growth in the nation's gross domestic product over the next few years. Yet the unemployment rate is currently at a 26-year high of 9.8 percent -- and likely to top 10 percent soon and stay there a while.

"Many factors are pushing against a quick recovery," said Heidi Shierholz, an economist at the labor-oriented Economic Policy Institute. "Things will come back. But it's going to take a long time. I think we will likely see elevated unemployment at least until 2014."

http://www.msnbc.msn.com/id/33384835/

We must have better ways to observe economic activity in the U.S. on a mass media scale. Right now, focusing on GDP seems to present incomplete image that is to the advantage of maintaining the status quo of shifting risk to the American people as their social mobility, wages and other economic prospects decline.