Demystifying GDP: What It Is, How It’s Measured, and Why You Should Care

Gross Domestic Product or GDP is one of the most talked about economic indicators. You might have heard about growth rates or projections for GDP on TV, the radio, or podcasts like this one. You might have also heard about GDP in reference to previous recessions or periods of high economic growth.

 

But what is GDP, exactly? How is it measured? And is it actually a good tool for looking at how well, or badly, an economy is doing?

 

In this episode of Fiscally Savage, hear what GDP measures, how it’s calculated, whether or not it’s a good indicator of standard of living, and whether or not we should actually care about it.

 

Show Highlights

 

• [03:10] What is GDP?
• [05:45] The standard formula for GDP
• [06:05] What is the consumption component of the GDP?
• [07:19] What is the government spending component of the GDP?
• [09:10] Why political parties may sometimes want to cut government spending
• [10:40] What is the private investment component of the GDP?
• [11:48] What is the net exports component of the GDP?
• [14:06] On the impact of the news on customer sentiment
• [15:13] Economic activities that are not included in the GDP
• [18:49] How oil and gas exports affect the United States’ GDP
• [21:34] Why Dylan doesn’t think the GDP is a good measure of economic performance
• [26:23] Why does GDP matter?
• [27:32] Closing statements

 

Links and Resources

 

• Fiscally Savage
• Fiscally Savage Tools
• Fiscally Savage on Instagram
• Fiscally Savage on Facebook
• Fiscally Savage on Twitter