What Is GDP?:
GDP is Gross Domestic Product
, which is everything produced by all the people and all the companies in the U.S. GDP don't include imports
and income from U.S. companies and Americans who are outside the country. Components for final products, such as computer chips aren't counted, just the final product, such as the computer. In 2013, the BEA revised all estimates since 1929 to include intellectual property, such as inventions.
Most estimates of economic production are nominal GDP. However, it's important to take out the effects of price increases, which is done in real GDP. Growth rates use real GDP to compare growth from one quarter to the next.
What Was GDP in 2009?:
In 2009, GDP started to improve after four quarters of decline during The Great Recession. Nominal GDP for 2009 rebounded to $14.418 trillion. (This was the most recent BEA revision, released July 29, 2013. The 2011 BEA estimates were lower: $13.939 trillion in 2011 and $14.119 trillion in 2010.
Here are the most recent GDP estimates for each quarter in 2009 (with the prior estimates in parentheses):
- Q1: $14,381 trillion ($13.893 trillion in 2011 revision, $14.049 trillion in 2010.
- Q2: $14.342 trillion ($13.854 trillion in 2011, $14.034 trillion in 2010.
- Q3: $14.384 trillion ($13.920 trillion in 2011, $14.114 trillion in 2010)
- Q4: $14.564 trillion ($14.087 trillion in 2011, $14.277 trillion in 2010).
GDP also refers to the GDP growth rate. This measures the changes in real GDP from quarter to quarter. In other words, the GDP growth rate measures economic growth. The ideal GDP growth rate is between 2-3%. Less than 2% will not create new jobs for the growing labor force. More than 3% means the economy is headed toward an asset bubble. This generally creates inflation and rising prices. Sometimes higher prices will cool off demand. More often, the bubble bursts, and the economy descends into recession. At that point, the economy contracts, and the GDP growth rate turns negative.
What Was the GDP Growth Rate in 2009?:
In 2009, the GDP growth rate
was -2.8%. In other words, the economy contracted 2.8%. (Note: This is the most recent estimate by the BEA, released on July 29, 2013. It was better than the prior estimate of -3.5%, released in 2011 and the 2.9% revision, released in 2010.) Here's the most recent GDP growth rate for each quarter in 2009 (The prior estimates are in parentheses):
- Q1: -5.4% (-6.7% in 2011, -4.9% in 2010)
- Q2: -0.4% (-0.7% in 2011 and in 2010)
- Q3: 1.3% (1.7% in 2011, 1.6% in 2010)
- Q4: 3.9% (3.8% in 2011, 5% in 2010)
The Economic Stimulus Package
, which was approved in March 2009, stimulated the economy enough to pull it out of recession in Q3. The remarkable Q4 growth rate of 3.8% is typical as an economy bounces out of recession. Businesses generally let their inventory run low when demand
is low. They must quickly restock, spiking GDP. (For more, see The Truth Behind the Q4 GDP Growth Rate