Gross Domestic Product (GDP)

In Depth

Gross Domestic Product is the single most comprehensive measure of a nation's economic output. Calculated quarterly by the Bureau of Economic Analysis (BEA), GDP captures the market value of all final goods and services produced within U.S. borders. The figure is reported in three successive estimates, advance, second, and third, each incorporating more complete data. GDP is typically expressed as a seasonally adjusted annualized rate, meaning the quarterly change is projected as if it continued for a full year. Economists break GDP into four components: consumer spending (roughly 70% of the total), business investment, government spending, and net exports. When GDP grows for consecutive quarters, the economy is expanding; two consecutive quarters of contraction is the informal definition of a recession. Real GDP adjusts for inflation, while nominal GDP does not. Business leaders watch GDP because it shapes Federal Reserve policy, investor sentiment, corporate earnings expectations, and hiring plans across every sector.