What Does an Increasing GDP Mean?

GDP is the acronym for gross domestic product. The GDP of a country is one measure of the size of the country's economy. The GDP numbers can be used to compare the economies of countries or states. Gross domestic product values are also used to view changes over time.

GDP Defined

The gross domestic product is the measurement of all the goods and services produced by an economy such as a national or state economy. The GDP for a country is the economic output measured over one year. Gross domestic product is considered to be the broadest measurement of economic activity. In the U.S., the Bureau of Economic Analysis (BEA) measures the U.S. GDP and reports quarterly on the size of the economy.


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Rising or Falling GDP

An increasing GDP means the economy is growing. Businesses are producing and selling more products or services. An economy needs to grow to provide a stable economic system and keep up with population growth. When the GDP declines, the economy is described as being in a recession. During a recession, fewer goods and services are being sold, business profits decline, government tax collections fall and unemployment rises.


GDP Reporting

The Bureau of Economic Analysis reports changes in the U.S. GDP quarterly. The quarterly GDP change is the change in the annual rate of GDP growth for the previous quarter. If the BEA reports a positive GDP number, the economy grew over the previous quarter. The rate of GDP increase gives an indication how fast the economy is growing. When the quarterly GDP results are released, the BEA can also make revisions to the growth rates for previous quarters.



Historic GDP Growth Rates

From 1980 through 2010, the U.S. GDP grew from $2.788 trillion to $14.660 trillion, according to the BEA. During that period the highest annual growth of the economy was 7.2 percent in 1984. During those years, only four years -- 1980, 1982, 1991, 2009 -- experienced negative GDP growth. The year 2008 had zero GDP growth. For the decade 2001 to 2010, annual GDP changes ranged from minus 2.6 percent up to 3.6 percent. It was the only decade since records started in 1930 without at least several years of 4 percent or better growth.



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