DATAPOST

GDP Measuring the Economy

Date last updated: September 14, 2020

Federal Reserve Bank of San Francisco Economic Education GDP – Did You Know?

Annual Real U.S. GDP • (Trillions of chained 2012 dollars) • National Output $18 Known As • Measure of the Economy’s Health $15.6 $15 $13.1 $12 Three ways to measure national output: $9.4 • Expenditure Approach: sum of goods and services sold $9 to final users (this is the most common approach) $6.8 • Income Approach: sum of income payments and other $6 Calculation costs incurred in the production of goods and services • Value-Added Approach: sum of the value added at $3 each stage of production 1980 1990 2000 2010 Source: Bureau of Economic Analysis • The Bureau of Economic Analysis (BEA) is responsible for calculating values of GDP • The BEA publishes estimates on an annual and Real GDP (adjusted for ) quarterly basis Data • The “advanced” estimates of GDP are released nearly doubled in value between roughly four weeks after the end of each quarter 1980 and 2000. In 2010, real GDP Reports (January, April, July, and October) • “Revised” estimates incorporate more complete reached $15.6 trillion. and accurate source data

DATAPOST www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education Components of GDP (Expenditure Approach) Real GDP in 2019 (Trillions of chained 2012 dollars) Consumption $22 [C] e.g., durables and nondurables $20 $18 69% [C] = $13.24 Investment $16 [I] e.g., business investment in $14 equipment and factories $12 Government Spending $10 [G] e.g., government purchases of $8 goods and services $6 18% [I] = $3.44 $4 Net Exports $2 17% [G] = $3.30 [X] e.g., U.S. exports to other countries, less imports $0 -5% [X] = $-0.92 -$2 Sources: Bureau of Economic Analysis & FRBSF Calculations

DATAPOST www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education U.S. Real GDP by major spending category

$18 (Annual values for years shown, $16 trillions of chained 2012 dollars) $14 $12 Consumption Investment $10 GovSpend $8 Net Exports $6 $4 $2 $0 -$2 1950 1960 1970 1980 1990 2000 2010 Source: Bureau of Economic Analysis

DATAPOST www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education U.S. Real GDP by Quarter (Trillions of chained 2012 dollars, SAAR) $20

$19

$18

$17

$16

$15

$14

$13

$12 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source: Bureau of Economic Analysis

DATAPOST www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education Annotated Chart Notes U.S. Real GDP by Quarter (Trillions of chained 2012 dollars, SAAR) $20 An inflation-adjustment method using 2012 dollars as Seasonally adjusted annual rate $19 the base year of comparison

Gray bars indicate periods of economic $18 according to the NBER Dating Committee $17

$16

$15 2001:Q4 2020:Q2 $13.28 $17.28 $14 2009:Q2 $15.13 $13

$12 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source: Bureau of Economic Analysis

DATAPOST www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education Measuring Changes in GDP: Yearly % Change

Real Gross Domestic Product (GDP) Q4/Q4 Percent Change 5 4 3 2 1 0 -1 -2 -3 -4 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: Bureau of Economic Analysis & FRBSF Calculations Note: Values are percent change using trillions of chained 2012 dollars (SAAR)

DATAPOST www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education Annotated Chart Notes Measuring Changes in GDP: Yearly % Change Real Gross Domestic Product (GDP) Q4/Q4 Percent Change 5 % change from 4 2001:Q4 to 2002:Q4 3 2 1 0 Real GDP dropped nearly -1 3% between 2007:Q4 and 2008:Q4 -2 The “” is the 18-month period from -3 Dec 2007 to June 2009, according to the NBER -4 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: Bureau of Economic Analysis & FRBSF Calculations Note: Values are percent change using trillions of chained 2012 dollars (SAAR)

DATAPOST www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education What Do You Think?

1. How has consumer spending changed since 1950? How have net exports changed since 1980? (See slide 4) 2. What was the lowest level of real GDP during the Great Recession? (See slide 5) 3. How does real GDP growth in the Great Recession compare to early recession? (See slide 7) 4. Why is GDP considered a good measure of the “health” of the economy?

DATAPOST www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education