Gross Domestic Product, the measurement of a nation’s economy, is most often calculated by adding Private Consumption, Investment, Government Spending and Net International Trade.
Consumption (food, gasoline, clothing, medical expenses, iPads) is about 68% of U.S. GDP, Investment 15% (in things like factories and equipment and houses, not financial investment), Government 20% (all levels of government) and Net Trade minus-3% (because we import more than we export, oil for example and all that stuff made in China).
If say, consumption decreases — perhaps because people no longer have enough equity in their home to finance a new boat — then GDP falls. If also, the boat factory no longer needs to expand because they can’t sell the boats they already make, then GDP falls. If teachers and firefighters get laid off because government doesn’t have the income from boat sales tax and boat factory workers’ income taxes, then GDP falls. If we don’t sell any boats overseas, but continue to import oil, or if oil costs more per barrel, net trade decreases, then GDP falls.
So, assuming that a growing population needs a growing GDP (it does), if you were the czar, what would you do today to increase C, I, G or T (and hence the GDP)?