Link to the GDP Report:
BEA National Economic Accounts
Text from video:
The GDP report, part 2. This is the second of a two part series on an overview of the Gross Domestic Product Report for all markets.
Continuing with the GDP Report, we have just finished the four main categories in the main table, Table 1, and are now at the bottom of the table.
There is also an addenda with many sections.
The first section is Final Sales of Domestic Product.
Because the GDP total includes goods that were produced and then placed into inventories, this section looks at just the total goods and services that were sold. This section includes both goods and services sold in the US, as well as exported out of the US.
The next section is Gross Domestic Purchases, which is all goods and services bought in the US that were produced in the US. This section does not include imports or exports.
The next section is Final Sales to Domestic Purchasers. This is all goods and services purchased in the US whether they were made in the US or not.
The next section is the Gross National Product.
The GNP is similar to the GDP but there is a major difference. The GDP totals up all goods and services produced in the US whether they were made by US companies, or foreign owned companies operating inside the US. It does not include goods or services produced by US companies that are not located in the US.
The GNP totals up all goods and services produced by US companies whether the companies are located in the US or not. However, it does not include goods and services produced by foreign own companies located in the US.
An example is that the products produced from a Honda Motors car plant located inside the US is added to the total for GDP, but not added to the total for GNP. Where as the goods produced from a Ford plant located in Europe is added to GNP but not added to GDP.
The next section is Disposable Personal Income. When people have more disposable income, they tend to spend more which increases demand.
The last part of the table has the main sections listed again, only this time with current dollars instead of real dollars. In other words, these totals include changes in price from inflation added back in.
The rest of the report contains many tables. There are tables breaking down the data from table 1 into much more detail, showing statistics from individual sectors. There are tables showing the actual dollar values of GDP. Tables showing GDP as index numbers. Price tables, income tables, corporate tables, and more.
At first glance, it can seem a little overwhelming; however, once one becomes familiar with the way the report is laid out, the tables become easy to read.
One table worth mentioning here is the Appendix Table A. The second half of the table contains a series of price indexes. Similar to the CPI report, this section shows the change in prices for goods and services. However, where as the CPI report uses a basket of goods to determine price changes, this table uses the change in prices for all goods and services. Some economists feel this is makes it a better indicator for inflation, and it has been said that, when determining when to change interest rates, the Fed relies more on the inflation rate from the GDP report, and specifically the core PCE section, then they rely on the CPI report.
In this section, the change in prices is broken down into many sub-sections. There is the change in price for all GDP, all GDP minus food and energy, this is also known as core GDP, and GDP minus the sales of computers.
Then there is the change in gross domestic purchases; in other words, the change in price for all goods and services purchased in the US whether the goods and services were made in the USA or not.
Following that is the change in core gross domestic purchases, and gross domestic purchases minus computers.
Finally there is the change in prices for personal consumption expenditures. This is the change in prices for all goods and services purchased by consumers. It excludes purchases by businesses and government.
The next section, PCE minus food and energy, in other words core PCE, is the most important section in this table.
Because the prices on food and energy can be effected short term by things like weather changes, leaving in these 2 categories often paints an unfair view of the economy. By removing these 2 categories, and just looking at the core for each section, one gets a more accurate view of the real change in prices felt by consumers.
The GDP report has its problems. For instance, many of the statistics in the report have to be estimated, making the reliability suspect.
Also, the report is released quarterly, making it severely lag as an indicator.
So that’s the GDP report. This report is huge. While I tried to cover the most important parts, I cannot possibly cover all the information it contains in a couple of short videos.
This report only comes out four times a year. It is well worth spending the time each quarter to look the report over.
Music:
Danse Macabre – Low Strings Finale (Theme)
Diving Turtle
Impact Andante
Kevin MacLeod incompetech.com
