US Economy – Gross Domestic Product
Per CNN’s Money report, US Economy is doing great. The above chart shows the growth of Gross Domestic Product. This is the fastest growth in the last two years since 4th quarter of 2011.
What is Gross Domestic Product and why is it important? From Investopedia,
The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period – you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year.
Measuring GDP is complicated (which is why we leave it to the economists), but at its most basic, the calculation can be done in one of two ways: either by adding up what everyone earned in a year (income approach), or by adding up what everyone spent (expenditure method). Logically, both measures should arrive at roughly the same total.
When GDP is up, we are growing. We see low unemployment and wage increases as businesses are seeking employees to meet demand. Where as when GDP drops, we are not growing. We see higher unemployment and wages drops as businesses can higher folks at lower rates due to high amounts of workers.
Economists are hopeful for continual growth in 2014. It may slow growth, but even slow growth will lower the unemployment and further increase our GDP.