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U.S. Gross Domestic Product?

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posted on Oct, 17 2008 @ 06:55 PM
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Hey guys,

I've been searching for a while, and can't seem to find an adequate answer to my question in regards to the U.S. Gross Domestic Product.

The experts do not consider us to be in a depression unless we see negative growth on our GDP. It looks like we've been stagnating lately according to the figures I have seen.

Here's the question: I've noticed GDP is always displayed in US Dollars. Since the dollar has lost significant value, wouldn't that mean, that the GDP numbers that are showing little growth, in reality have slid backwards in the world market? If I am wrong, can you please tell me where my logic fails?

I am by no means an economist or a financial expert... any help at all would be appreciated

thanks in advance!

Mods, if this is in the wrong forum, please move




posted on Oct, 19 2008 @ 09:36 AM
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GDP measures the physical amount of goods and services produced in an economy over a given period of time. The value of this output has to be expressed in a particular unit of currency.

Suppose the US's GDP in 2006 was $100bn (measured in end-2006 prices), and in 2007 was $105bn (measured in end-2007 prices). If inflation had been running at 5% during 2007, then in real terms the US has not physically produced any more goods and services in 2007 than in 2006 - what appears to be a 5% rise can be accounted for solely in the fact that that prices, not actual output, are now 5% higher.

A 3% rise in GDP means that actual output (i.e. stripped of the effect of inflation) is 3% higher. Here in the UK, a recession is defined as 2 consecutive quarters where actual output has fallen. I don't know if the same definition is used in the US.

A fall in the value of the dollar means that it will buy fewer yen, euros, pounds etc. than it previously did, but it has no direct impact on the calculation of GDP. Maybe where you have "gone wrong" is in mixing up GDP and the effect of a fall in the external value of the dollar, which is quite easy to do.

I hope this goes some way towards answering your question.

Steve Howarth



posted on Oct, 19 2008 @ 10:00 AM
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Thanks! thats exactly what I what I was looking for!

The only thing that I can't get through my head, is if we measured our GDP in Yen, or Euros instead of the USD, the wouldn't the figures show that our GDP is less than what our reports in the U.S. state?

LOL sorry man, I'm economically retarded.

Woe be unto him who asks me to be their accountant lol



 
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