Each quarter the Bureau of Economic Analysis reports on the value of the major components of gross domestic product and the growth of each component. There are normally three versions of this report; the first estimate is released at the month end following the closure of the quarter. One month later the second estimate is released and one month after that the final result is released. Unfortunately, final is not always final and often subsequent revisions are performed sometimes going back decades as happened in 2013 going back to 1929. (Not a typo! 1929).
GDP is one of the most comprehensive and closely watched economic statistics: It is used by the White House and Congress to prepare the Federal budget, by the Federal Reserve to formulate monetary policy, by Wall Street as an indicator of economic activity, and by the business community to prepare forecasts of economic performance that provide the basis for production, investment, and employment planning.
To fully understand an economy’s performance, one must ask not only “What is GDP?” (the value of the economy’s output), but other questions such as: “How much of the increase in GDP is the result of inflation and how much is an increase in real output?” “Who is producing the output of the economy?” “What output are they producing?” “What income is generated as a result of that production?” and “How is that income used (to consume more output, to invest, or to save for future consumption or investment)?” Two measures are presented; nominal and real.
In the SMU reports we consider the “Real” measure of GDP which is inflation adjusted and reported in chained 2009 dollars.
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