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.
What Was GDP in 2009?:
In 2009, GDP started to improve after four quarters of decline during The Great Recession. GDP for 2009 rebounded to $13.939 trillion. (This was the most recent BEA revision, released July 29, 2011. The prior BEA estimate was higher, at $14.119 trillion
This was a little higher than in 2006, and about the same as GDP was at the beginning of 2009. Here is the most recent GDP estimate for each quarter in 2009 (with the prior estimate in parentheses):
- Q1: $13.893 ($14.049) trillion
- Q2: $13.854 ($14.034) trillion
- Q3: $13.920 ($14.114) trillion
- Q4: $14.087 ($14.277) trillion.
GDP also refers to the GDP growth rate. This measures the changes in 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 -3.5%. In other words, the economy contracted 3.5%. (Note: This is the most recent estimate by the BEA, released on July 29, 2011. It was worse than the prior estimate of 2.9%.) Here's the most recent GDP growth rate for each quarter in 2009 (The prior estimate is in parentheses):
- Q1: -6.7% (-4.9%)
- Q2: -.7% (-.7%)
- Q3: 1.7% (1.6%)
- Q4: 3.8% (5%)
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