Understanding the Importance of Gross Output

Gross Output (GO) is a vital statistic that measures all the stages of production, from mining and production to distribution and retail. While GDP focuses only on final output or consumer spending, GO provides a more comprehensive view of the entire economy. By including all expenditures at different stages, GO reveals that business-to-business spending constitutes two-thirds of the economy, making it more volatile than consumer spending. GO also offers better insights into economic conditions, as it reflects the imbalances in the supply chain and stages of production. For instance, during the 2008 financial crisis, GO plummeted by double digits while GDP only fell 2%. Recognizing the significance of GO helps analyze business cycles and facilitates a more complete understanding of the economy.