Macroeconomics

GDP

GDP (GROSS DOMESTIC PRODUCT): the money value of all final goods and services produced in a country's borders in a given year. GDP is not a perfect measure of the "health" of the economy because it fails to directly account for certain quality of life factors and makes arbitrary adjustments on others. For example, earthquakes and natural disasters can increase GDP because of the rebuilding that is necessary. Moreover, GDP does not reflect the state of the environment or the value of "leisure" time. Nevertheless, it is perhaps the single most important statistic that describes the economy.

If we divide GDP by the population, we calcuate GDP per capita. This tells us how wealthy our nation's citizens are on average. Note, however, that GDP only tells us about averages and tells us nothing about the distribution of the wealth. For that we need to look at statistics on income distribution.

Click here to see a table of GDP data from 1947 to the present, posted at the St. Louis Federal Reserve web site. GDP Data

GDP does not include:

sale of used goods (used cars)
sale of intermediate goods (raw materials)
illegal transactions (drugs, gambling)
purely financial transactions (stocks,bonds)
non-market transactions (do-it-yourself repairs, homemakers)
imports (goods made outside U.S. borders)

Not everyone believe that GDP fully measures (or even comes close to measuring) "well-being." A recent article explains their position.

Gross National Product (GNP)

GNP was used in the US before 1991, then we switched to GDP. (Nominal) GNP is the money value of all final goods and services produced by a country's citizens in a given year.

Click here to see GNP data from 1947 to the present: GNP Data

GDP = GNP + production in US by foreign owned firms - production abroad by US firms

Economy at a Glance

Click here to see major economic indicators published by the Bureau of Labor Statistics

*Based on designs by Tim Yeager