How fast is the economy growing? How much output is produced by labor and capital supplied by the United States? What income is generated by production? BEA produces several different measures for tracking production and economic growth in the United States. Gross domestic product (GDP) is one of the most widely used metrics, but there are several others that also provide important information on the condition of the United States. Although these measures have long been available in several national income and product account (NIPA) tables, BEA has now grouped these measures together for the first time in a new family of tables. An added bonus: the new tables are part of BEA’s award-winning interactive database that allows users to generate custom tables and charts directly on our Web site.
BEA developed the new tables to help our customers access the different statistics from one location. For those less familiar with these economic gauges, the new tables organize and label them in a way that clarifies their similarities and differences, making it easier to figure out their most appropriate analytical uses. The tables provide measures of total production and income generated within the geographical boundaries of the United States as well as that which is generated by U.S. residents regardless of geographical location. It also includes estimates of final expenditures by U.S. residents, the purchasing power of income, and disposable, or after-tax, personal income.
Grouping these data together addresses a key fact of economic analysis that many of our users already know: no single aggregate is useful for all types of analysis. While one measure may be appropriate in some cases, others may be more useful in other cases. And in still other cases, several aggregates must be examined together. Let’s take a closer look at these measures:
• BEA’s featured measure of production is GDP. It measures spending by consumers, businesses, government, and overseas buyers on domestically produced final goods and services. GDP is BEA’s featured measure because the sources of data used to make the GDP estimates are generally more accurate and timely. GDP’s income-side counterpart—gross domestic income, or GDI— is equal to GDP in theory, but not in practice, because it is based on different source data with differences in timing and coverage. Some research suggests that income measures may be more useful for analyzing the turning points of business cycles. By presenting them side by side, the new tables reveal how closely they move together over time, while highlighting their differences in certain quarters.
• GDP is a gross measure of production—it includes the value of depreciation (or, in NIPA terminology, consumption of fixed capital) and thus reflects the value of production without regard for the amount of fixed assets used up in that production. Net domestic product, or NDP, excludes the consumption of fixed capital and consequently reflects the output that is left available for consumption or for adding to the nation’s wealth after maintaining the existing stock of assets. NDP is often more useful for analyses of sustainable growth in production.
• While GDP measures domestic production, final sales to domestic purchasers focuses on the demand for goods and services by consumers, businesses, and the government within the United States. It excludes changes in business inventories and exports, but it includes imports. This metric is particularly useful when analyzing trends in U.S. demand relative to U.S. production and the role that imports play in meeting that demand.
• Purchasing power measures—command-basis GDP and command-basis GNP—provide alternative measures of inflation-adjusted economic growth that reflect gains or losses in real purchasing power resulting from changes in U.S. terms of trade— that is, by the relative prices of its imports and exports. The command-basis measures provide a picture of economic growth that values domestic production in terms of what it allows the United States to purchase. For instance, in the third quarter of 2009, real GDP grew 1.4 percent, but command-basis GNP only grew 0.2 percent. Purchasing power of the U.S. economy grew less rapidly than its real output because increases in oil prices caused the prices paid by U.S. residents to increase more rapidly than the prices they received for their production. As a result, gross domestic purchases prices rose 1.7 percent in the third quarter, while GDP prices—which exclude the price of imported oil—increased 0.7 percent.
The new family of tables—table 1.17.1 for percent changes, table 1.17.5 for current dollars, and table 1.17.6 for chained dollars—are available in the national section of the BEA Web site at www.bea.gov; select “Interactive Tables” and “Section 1” for domestic product and income tables or click here.