The 5 Most Important U.S. GDP Statistics and How to Use Them
The Five GDP Statistics You Need to Know
Gross domestic product measures a country's economic output. There are five GDP statistics that give you the best snapshot of the health of the United States economy.
U.S. GDP is the most important economic indicator because it tells you the health of the economy. The U.S. debt to GDP ratio describes whether America produces enough each year to pay off its national debt. U.S. real GDP corrects for changes in prices.
1. U.S. GDP
U.S. GDP was $19.739 trillion in the fourth quarter of 2017. What exactly does this mean? The gross domestic product of the United States ran at a rate of $19.739 trillion a year from October to December 2017. This statistic is also known as nominal GDP. The U.S. Bureau of Economic Analysis provides this estimate in the National Income and Product Accounts Interactive Data, Table 1.1.5. Gross Domestic Product.
U.S. GDP is the economic output of the entire country. It includes goods and services produced in the United States, regardless of whether the company is foreign or the person providing the service is a U.S. citizen. To find out the total economic output for all American citizens and companies, regardless of their geographic location, you'd want to look at U.S. gross national product, also known as gross national income.
There are four components of GDP:
- Personal Consumption Expenditures - All the goods and services produced for household use. This is almost 70 percent of total GDP.
- Business Investment - Goods and services purchased by the private sector.
- Government Spending - Includes federal, state and local governments.
2. Debt to GDP Ratio
The U.S. debt-to-GDP ratio for Q4 2017 is 104 percent. That's the $20.493 trillion as of December 29, 2017, divided by the $19.739 trillion nominal GDP. Bond investors use it to determine whether a country has enough income each year to pay off its debt.
This debt level is too high. The World Bank says that debt that's greater than 77 percent is past the "." That's when holders of the nation's debt worry that it won't be repaid. They demand higher interest rates to compensate for the additional risk. When interest rates climb, economic growth slows. That makes it more difficult for the country to repay its debt. The United States has avoided this fate so far because it is one of the strongest economies in the world.
If you review the national debt by year , you'll see one other time the debt-to-GDP ratio was this high. That was to fund World War II. Following that, it remained safely below 77 percent until the 2008 financial crisis. The combination of lower taxes and higher government spending pushed the debt-to-GDP ratio to unsafe levels. Even the the economy is growing at a healthy 2-3 percent rate, the government has not reduced the debt.
It keeps spending at unsustainable levels.
3. Real GDP
U.S. real GDP was $17.273 trillion for Q4 2017. This measure takes nominal GDP and strips out the effects of inflation. That's why it's usually lower than nominal GDP.
It's the best statistic to compare U.S. output year-over-year. That's why the BEA uses it to calculate the GDP growth rate. It's also used to calculate GDP per capita. The BEA provides this date in the NIPA charts, Table 1.1.6. Real Gross Domestic Product, Chained Dollars.
4. GDP Growth Rate
The U.S. GDP growth rate was 2.6 percent for Q4 2017. This indicator measures the annualized percent increase in economic output since the last quarter. It's the best way to assess U.S. economic growth. If you look at U.S. GDP history, you'll see this is a sustainable rate of growth.
5. GDP per Capita
In 2016, the U.S. real GDP per capita was $57,300. This indicator tells you the economic output by person. It's the best way to compare GDP between countries. For that reason, GDP per capita uses purchasing power parity. This levels the playing field between countries. It compares a basket of similar good, taking out the effects of exchange rates. The United States compared to other countries.