GDP is the value of goods and services produced within a country or region in a given period. It includes spending by individuals, businesses, and governments, as well as the net trade balance and certain intangibles. There are two variations of quarterly GDP values: nominal and real. GDP per capita is used to determine the standard of living. Quarterly GDP results help assess economic strength, growth rate, and serve as a basis for comparing different countries’ economies.
Gross domestic product (GDP) represents the value of goods and services that a country or region produces within a given period of time. Although it is usually reported annually, many countries also determine GDP on a quarterly basis. Quarterly GDP is the value of those goods and services produced within a specified three-month period of a calendar year.
The Gross Domestic Product calculation includes the full value of all goods and services from within the country. Spending by individual consumers, businesses, and governments are considered in the total. The net trade balance – the value of exported goods minus the value of imported goods – is also accounted for. Quarterly GDP results also incorporate certain intangibles, such as investment income and the fair rental value of a home the owner is living in. Wages earned by someone working outside the country are not considered for GDP purposes.
In the world of macroeconomics, there are two variations of quarterly GDP values. Nominal GDP reflects the value of goods and services at prices prevailing at the time the results are calculated. Does not include adjustments for price fluctuations over a period of time. Real GDP takes into account the effects of inflation and calculates the value using prices from a predefined period, usually referred to as the base year. Real GDP values will usually be lower than nominal GDP values and are used in most economic models.
Quarterly GDP results are useful as an indicator of a country’s economic strength. Numbers also help to measure the standard of living in a country or region. When determining the standard of living, economists usually calculate GDP per capita. This is done by dividing the total GDP by the number of people inhabiting the country. The resulting value indicates an average amount of GDP per person.
The values found in the quarterly GDP also help to assess the growth rate of an economy. This can alert the government to the potential need for a change in monetary or fiscal policy. GDP assessments also serve as a good basis for comparing the size and growth rate of different countries’ economies.
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