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GDP
Measuring the Economy
Date last updated: April 4, 2014
Federal Reserve Bank of San Francisco
Economic Education Group
GDP – Did You Know?
Known As
• Gross Domestic Product
• National Output
• Measure of the Economy’s Health
Annual Real U.S. GDP
(Trillions of chained 2009 dollars)
$18
$12.6
$15
• Three ways to measure national output:
Calculation
• Expenditure Approach: sum of goods and services sold
to final users (this is the most common approach)
• Income Approach: sum of income payments and other
costs incurred in the production of goods and services
• Value-Added Approach: sum of the value added at
each stage of production
$12
$9
$14.8
$8.9
$6.4
$6
$3
1980
1990
2000
2010
Source: Bureau of Economic Analysis
Data
Reports
• The Bureau of Economic Analysis (BEA) is
responsible for calculating values of GDP
• The BEA publishes estimates on an annual and
quarterly basis
• The “advanced” estimates of GDP are released
roughly four weeks after the end of each quarter
(January, April, July, and October)
• “Revised” estimates incorporate more complete
and accurate source data
DataPost
Real GDP (adjusted for inflation)
nearly doubled in value between
1980 and 2000. In 2010, real GDP
reached $14.8 trillion.
http://www.frbsf.org/education/teachers/datapost/index.html
FRBSF Economic Education Group
Components of GDP
(Expenditure Approach)
Real GDP in 2013
[C]
[I]
[G]
[X]
Consumption
e.g., durables and nondurables
(Trillions of chained 2009 dollars)
$18
$16
Investment
$14
e.g., business investment in
equipment and factories
$12
Government Spending
$8
e.g., government purchases of
goods and services
$6
$4
16% [I] = $2.57
Net Exports
$2
18% [G] = $2.90
e.g., U.S. exports to other
countries, less imports
$0
68% [C] = $10.73
$10
-3% [X] = $-0.41
-$2
Sources: Bureau of Economic Analysis &
FRBSF Calculations
DataPost
http://www.frbsf.org/education/teachers/datapost/index.html
FRBSF Economic Education Group
U.S. Real GDP
by major spending category
$16
(Annual values for years shown,
trillions of chained 2009 dollars)
$14
$12
Consumption
$10
Investment
$8
GovSpend
$6
Net Exports
$4
$2
$0
-$2
1950
1960
1970
1980
1990
2000
2010
Source: Bureau of Economic Analysis
DataPost
http://www.frbsf.org/education/teachers/datapost/index.html
FRBSF Economic Education Group
U.S. Real GDP by Quarter
(Trillions of chained 2009 dollars, SAAR)
$17
$16
$15
$14
$13
$12
$11
2000
2002
2004
2006
2008
2010
2012
Source: Bureau of Economic Analysis
DataPost
http://www.frbsf.org/education/teachers/datapost/index.html
FRBSF Economic Education Group
Annotated Chart Notes
U.S. Real GDP by Quarter
(Trillions of chained 2009 dollars, SAAR)
$17
An inflation-adjustment
method using 2005 dollars as
the base year of comparison
Seasonally adjusted
annual rate
$16
Grey bars indicate periods of economic
recession according to the NBER Business
Cycle Dating Committee
$15
2013:Q4
$15.94
2001:Q4
$12.71
$14
2009:Q2
$14.36
$13
$12
$11
2000
2002
2004
2006
2008
2010
2012
Source: Bureau of Economic Analysis
DataPost
http://www.frbsf.org/education/teachers/datapost/index.html
FRBSF Economic Education Group
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 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Bureau of Economic Analysis & FRBSF Calculations
Note: Values are percent change using trillions of chained 2009 dollars (SAAR)
DataPost
http://www.frbsf.org/education/teachers/datapost/index.html
FRBSF Economic Education Group
Annotated Chart Notes
Measuring Changes in GDP: Yearly % Change
Real Gross Domestic Product (GDP)
Q4/Q4 Percent Change
5
4
% change from
2001:Q4 to 2002:Q4
3
2
1
0
Real GDP dropped nearly
3% between 2007:Q4 and
2008:Q4
-1
-2
The “Great Recession” is
the 18-month period between
Dec 2007 to June 2009,
according to the NBER
-3
-4
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Bureau of Economic Analysis & FRBSF Calculations
Note: Values are percent change using trillions of chained 2009 dollars (SAAR)
DataPost
http://www.frbsf.org/education/teachers/datapost/index.html
FRBSF Economic Education Group
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 2000s recession?
(See slide 6)
4. Why is GDP considered a good measure of the
“health” of the economy?
DataPost
http://www.frbsf.org/education/teachers/datapost/index.html
FRBSF Economic Education Group