US Gross Domestic Product

Think of it this way

It is the whole country's paycheck. Without knowing it, there is no way to tell whether a debt is large or small.

What is US Gross Domestic Product?

The market value of everything the United States produces in a year: goods, services, public works and everything else. The Bureau of Economic Analysis publishes it every quarter, and the figure is annualized, meaning it is expressed as what would be produced in twelve months at that quarter's pace. It is in current dollars, so it includes inflation: part of its rise is that more is produced and part is that everything costs more. How it is measured. There are three paths that give the SAME figure: by spending (who buys), by production (who makes it) and by income (who earns it). This chart offers the first two in the Version selector.

How to read US Gross Domestic Product

It almost always rises, and it is worth knowing why before drawing conclusions: this series is nominal, so it mixes real output with inflation. In a year of 5% price growth, the line rises 5% even if not a single extra screw has been produced. Flat or declining stretches are rare and coincide with recessions.

What US Gross Domestic Product means for the market

It is for sizing things up, not for trading. It is the number that turns “forty trillion in debt” into “a little more than a year of everything the country produces”, which is the only way that figure means anything. When GDP falls, the three series that have it in the denominator shoot up without debt or spending having moved: that is the effect you need to discount when reading them.

Where the money flows

No money moves here: it is a measure of output, not a balance or a flow between accounts. It appears in this section because it is the denominator of the three series expressed over GDP —debt, government accounts and interest— and because it answers the question everything else takes for granted: how much the country produces, against which those figures are compared.

What to watch in US Gross Domestic Product

Look at it when a series over GDP makes a sharp jump, to find out which of the two halves moved. And do not confuse it with real GDP: this is the nominal figure, the one used for comparison with debt and spending, which are also nominal. Switch between the two versions to see the same total by who buys it and by who produces it.

It does not move liquidity by itself, but it is the yardstick against which almost everything else in this section is measured.