Traditionally, economic growth is measured in terms of how much the gross domestic product (GDP) of the country is growing, that is, how quickly the American pie is getting bigger. What is a better way to measure economic growth by for individuals?

For you and me it makes more sense to measure economic growth by how much further the money in our wallets and bank accounts go year over year. If you get a raise, you experience economic growth because you have more money to spend and save. If you don’t get a raise, but prices on the products you buy go down, or the quality of those products goes up for the same money, your personal economy is growing, because you get more value for your money. And, conversely, if you get a pay cut or prices go up you experience economic contraction.

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