Gross Domestic Product (GDP)

 

Gross Domestic Product (GDP)

10-18-2009 | | Economy, Investments, Planning || by Reese Harper CFP®, ChFC, CLU

To understand the health of our economy, it is important to understand Gross Domestic Product (GDP).  GDP measures all goods and services that a country makes within its borders during a year.  It’s an important measuring tool that helps determine the health of a nation’s economy.  It’s also a good measuring stick for our standard of living.  For example, from 1973-2009, the U.S. economy grew, on average, 2.8% annually.  Therefore, we can consider 2.8% growth as normal for our country.  Fifty economists from various academic and investment institutions recently predicted GDP growth rates through the end of 2010 in a survey called the Blue Chip Economic Forecast®.  Now before I tell you exactly what I’m about to tell you, I’ll preface it with one of my favorite quotes about economists. “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.” Generally speaking, this is that far off.  However, of these 50 economists, even the most optimistic do not believe that we will be back to this rate of growth at the end of 2010.  Some doubt that we will even reach 1% growth by the end of 2010.  In short, a sizable group of experts is forecasting that the economy as a whole will grow quite slowly through 2010.

 

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