During the Great Depression some looked at Macy’s sales, which were up, and claimed the depression was over. But Macy’s’ sales were up bc other retailers were gone. This paradox was one of the primary reasons why national income statistics were invented. https://twitter.com/patrickw/status/1314931751203069953

Let me qualify “invented”: of course National income accounting & statistics predates the 30s. But they were primarily used for measuring, well, income. This technique was incorporated into the business cycles research project of Wesley Mitchell’s NBER in the 20s. But it remained

marginal as one element among many used for assessing the business cycle. NBER’s collaborators at the Commerce Department were convinced you had to follow the flow of commodities along supply chains, but unsurprisingly failed miserably to produce a holistic statistical picture.

This is where national income presented a new way of monitoring economic flows within and across sectors. Now you could trace flow of income as a mirror image of intersectoral flows and balance emergent imbalances by intervening in these flows through the state budget.

For more read this thread on my paper on the construction of GDP’s predecessor, GNP https://twitter.com/ummodern/status/1247512202833207296