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Consumer Spending by Type, 2002 (in billions) Category Durables Nondurables Services Spending in 2001 Percent (billions) of Total $872.4 12 2,113.9 4,314.5 29 59 Source:Bureau of Economic Analysis Total consumption by U.S. households in 2002 was a $7.3 trillion Components of Business Fixed Investment, 2002 (billions/percent of total) Hous ing 269. 30 / 17.0% Equip. & Software 470. 90 / 29.7% Business St ructures 847. 60 / 53.4% Source: www.bea.gov Two Approaches to Measuring GDP, 2002 (all data in billions of dollars) Expenditure Approach Consumption $7,301 Investment 1,586 Government expenditure 1,973 Exports 1,018 Minus: Imports 1,436 Total = GDP $10,442 Factor Payments Approach Employee compensation $5,999 Profits, rent, and interest 2,273 minus: net income earned abroad 23 Capital consumption adjustment 1,393 Indirect business taxes 800 Total = GDP $10,442 Note: These figure are subject to revision Source: Bureau of Economic Analysis From National Income to Disposable Income, 2002 (all data in billions) National Income $8,272 Less: Corporate Profits 659 Less: Contributions for Social Insurance 386 Plus: Dividends 434 Plus: Transfer Payments 1,287 Equals: Personal Income 8,948 Minus: Personal Taxes 1,118 Equal: Personal Disposable Income $7,830 Note: These figure are subject to revision Source: Bureau of Economic Analysis Personal disposable income is a good measure of the spending power of the household sector Measuring GDP: A Summary Expenditure Approach: GDP = C + I + G + NX Value-Added Approach: GDP = Sum of value added created by all firms Factor payments approach: GDP = Sum of factor payments made by all firms = wages and salaries + interest + rent + profit = National Income