WOW The Bureau of Economic Statistics Is About to Start Tracking the Economy in Austrian School and Rothbardian Fashion

The Bureau of Economic Analysis, later this week, will start releasing a new way to measure the economy. They are calling the new data gross output.

The BEA reports on the new data (my highlight)

Want to know how much manufacturing contributed to U.S. economic growth in a given quarter? How about educational services?

For the first time, the Bureau of Economic Analysis (BEA) will soon start producing on a regular basis quarterly estimates of economic activity generated by 22 industries...

The new quarterly statistics will provide a different look at quarterly economic growth.  For instance, on March 27, BEA reported that the U.S. economy grew at a 2.6 percent pace in the fourth quarter of 2013. While that GDP report provides a lot of crucial information, the new quarterly GDP by industry report will shed light on whether most industries contributed to the nation’s economic growth or whether just a handful of industries accounted for most of it.

The new quarterly statistics also will serve as a better barometer for potential turning points in the U.S. economy and give businesses and policymakers a better understanding of the strengths and weaknesses of the overall economy. For instance, in 2005—during the run up to the great recession—the U.S. economy grew 3.4 percent. Finance, insurance, real estate, rental, and leasing accounted for 1.3 percentage points of that growth—more than a third. Providing regular, timely updates on how economic growth is distributed across the industries can help policymakers and business leaders identify potential trouble spots in the economy.

 Here's a video the BEA has put out on the new statistic:

There are two fascinating points to be noted about this new data.

First, it is breaking down economic activity by 22 different private industry sectors.This is decidedly the type of data that Austrian school economists would desire to look at in attempting to understand a period in economic history relative to the business cycle, since it is Austrian school business cycle theory that emphasizes that central bank money printing enters the economy at specific points, rather than being evenly dispersed trough the entire economy at the same time. And it is those points where the money enters, chiefly the financial sector and the overall capital goods sector, that are the areas which benefit from the money printing.

Indeed, the BEA release about the new numbers, in demonstrating their value, uses as an example of what to expect from the data by mentioning the strong growth, before the 2008 financial crisis, in what are for the most part the capital goods sectors of the economy (see: the highlight above), just the type of growth areas in the boom phase that Austrian economists would expect.

The second point that must be noted is that this data will not include any government activity. This is music to the ears of followers of the great Austrian economist Murray Rothbard.

Rothbard explained in America's Great Depression his reason for developing private national product, which also excludes government activity:

The critical assumption is the challenge to the orthodox postulate that government spending, ipso facto, represents a net addition to the national product. This is a clearly distorted view.

Joel Bowman in 2009 summarized the importance of the Rothbardian perspective:

 Measure it how you will, dear reader; true economic progress is forged not in the crucibles of debt or coercion, but from the honest toil of individuals seeking to better their own lot, unhindered from the government’s long, strangulating reach. No nation can spend its way out of recession…no matter what the official GDP numbers may imply.

To be sure, it is hard to suppose that the BEA, a government agency, does not believe that government does not bring value to the economy. But this addition to government economic data collection is a sure sign that they know their old data collection points have fallen short. It is not clear that they are aware that they are moving in the direction of Austrian and Rothbardian insights. But as Charlie Sheen might say, if he were an Austrian, BEA data collection movement in this direction is WINNING.