If you need a great example of how GDP isn't really a great way of measuring the actual state of an economy, in its ability to actually meet the needs of people, then a new piece from Center for the Advancement of the Steady State Economy does a great job. Here's a bit of Eric Zencey's piece, using the aftermath of hurricanes Irene in Vermont and Katrina in New Orleans as examples:
I interviewed this particular economist by phone in 2009, when I was putting together an op-ed piece on the shortcomings of GDP for the New York Times. When I asked the professor about the perverse way GDP tallied the results of Hurricane Katrina ($82 billion in property damage, so an $82 billion boost to GDP if all the damage were to be repaired), he defended GDP. "That figure is going to include a lot of improvements," he said. "Those people are getting new cars, new carpets, new refrigerators." Notice that this way of thinking gives a disciplinary seal of approval ("100% rational behavior") to a very uneconomic, irrational exchange: you'd be crazy to pay the cost of complete destruction of your household in order to get incremental upgrades of some of the things it contains.
More on Economics
What Are More Eco-Friendly Ways For Measuring the Economy Than GDP?
The Economics of Happiness as a Response to Environmental Crisis (Video)