This morning, Scioto Analysis released an updated Genuine Progress Indicator (GPI) calculation for the state of Ohio over the past five years. GPI is an alternative to GDP for measuring the wellbeing of an economy, including consideration for environmental and social conditions.
In recent years, a shortcoming of GDP is that it has overstated the strength of the post-covid economic recovery. Many Ohioans are still feeling the negative effects of the pandemic, despite the fact that state GDP has grown significantly over the past two years.
Conversely, GPI reveals a less optimistic picture of the wellbeing of the economy during this time – more in line with what people are actually experiencing. Since 2018, GPI has only grown by 8% compared to almost 24% for GDP.
One of the most significant reasons GPI has been lower than GDP in recent years is the cost of income inequality in Ohio. In 2022, income inequality was valued at almost $150 billion. This comes after a large spike in inequality during the pandemic.
This is counterbalanced by some positive trends in GPI as well. Personal spending on durable goods and other forms of investment stayed fairly constant despite the pandemic. This meant that the multi-year services people receive from big purchases like cars and homes has continued to provide steady value to the economy during this time.
“GDP fails to explain people’s lived experience in the economy today. Productivity is correlated with wellbeing, but it’s not the whole story,” said Michael Hartnett, the study’s co-author. “Our study helps demonstrate that in the United States, GPI can help get our indicators more closely aligned with what we actually value in society.”