Components of the Gross Domestic Product

If the word on the street during the late 1990s was that the business cycle was dead, the lesson of the early 2000s is that Economics Happens. So in the spirit of too little, too late, here is a "big picture" overview of the entire U.S. economy.

Arrows indicate the direction of payments; solid arrows are the components making up the Gross Domestic Product.


GDP Diagram. Gross Domestic Product is the value of all goods and services produced in a year, as measured by their final purchase price.

The Gross Domestic Product is the output of the U.S. economy: the value of all goods and services produced in a year, measured by purchase price, and categorized by purchaser.

GDP =Consumer Spending
+Government Spending
-Trade Deficit.
(Click on the green glossary links above for details.) These four categories are represented by the four solid arrows in the diagram. The first three really are direct purchases from producers. The last (the trade deficit) is an adjustment factor to account for the difference between "purchased in the U.S." (what the first three arrows measure) and "made in the U.S." (what the GDP is really supposed to be).
Article Contents
GDP Diagram
Government Spending
Tax Cuts
Economic Indicators
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