Where (Previously) Illegal Activities Gave the GDP New Highs

Recently, the U.S. GDP slid into negative territory:

At the same time, the Canadian GDP got a bit of a boost from marijuana.

The GDP and Marijuana

Between 2018 and 2021, cannabis added $43.5 billion to Canada’s GDP. On the demand side, consumer spending got an $11.8 billion increase. Meanwhile, businesses’ cannabis capital expenditures were close to $29 billion.

To imagine the GDP and marijuana, we can think of its retailers, producers, and the supply chain:

Detailing the GDP contribution, Deloitte tells us that the construction industry and retrofitting related industries played a large indirect role:

Our Bottom Line: The GDP

The GDP is the total dollar value of the goods and services a country produces in one year. It includes what consumers, businesses and governments spend. Then, subtracting imports from exports, we get our total.

From here, though, we have many more decisions.

In a recent report, the BEA (U.S. Bureau of Economic Analysis) estimates that illegal activities would have added $234 billion to the 2017 GDP. The big categories are illegal drugs ($111 billion), business theft ($109 billion), prostitution ($10 billion), and gambling ($4 billion).

Most crucially, they concluded that illegal activities would have increased the economy’s GDP totals:

Unlike the U.S.’s hypotheticals, for the EU, illegal activities actually were a real contributor to the GDP:

When proposing a budget, the President cares about the GDP. As it elevates interest rates, the Federal Reserve monitors the economic growth or decline shown by the GDP. And similarly, as the Congress implements new programs, the GDP matters. So, we can ask, if we want marijuana to be a part of the total.

My sources and more: The Deloitte report reminded me that it was time to return to the complexities of the GDP and marijuana. From there, (the former) “Numbers Woman” at WSJ gave some insight as did an EU Handbook and this BEA report.

Originally published at https://econlife.com on May 29, 2022.

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Located at the intersection of current events, history, and economics, econlife® slices away all of the layers that make economics boring and complex.

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Econlife Team

Econlife Team

Located at the intersection of current events, history, and economics, econlife® slices away all of the layers that make economics boring and complex.

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