You probably hear about GDP on the evening business news all the time, but do you wonder what it means and what it indicates about our current economy?
GDP stands for gross domestic product; it represents the output of goods and services produced by labor and property in the United States, and is used to indicate if our economy is shrinking or expanding. GDP tracks the size of our economy by calculating the total dollar value of all goods and services produced over a specific time period in comparison with the previous quarter.
What has GDP been historically?
Since the recession officially ended June 2009 our economy has been expanding, but at different rates. GDP growth was at 4.1% about 9 months ago; this year it slumped to 2% in the first quarter, and to 1.3% for the second quarter. The Bureau of Economic Analysis early estimate is that for the 3rd quarter of 2012 it increased at an annual rate of 2.0 percent.