(More on these results to come.) Update, pm Pacific: Neil asks what happens if one uses hours or final sales.
Figure 9: Log real GDP (blue), and nonfarm payroll employment (red), real final sales (black), and aggregate hours worked (pink), all normalized to 2009Q2=0.
Measured by traditional yardsticks for growth, like gross domestic product, the American economy definitely looks weak.
View it through the prism of hiring and employment, however, and the economy seems surprisingly strong.
The idea behind the expenditure approach is that the output that is produced in an economy has to be consumed by final users, which are either households, businesses, or the government.
Therefore, the sum of all the expenditures by these different groups should equal total output—i.e., GDP.
It includes all final goods and services—that is, those that are produced by the economic agents located in that country regardless of their ownership and that are not resold in any form.
Growth economists doing research in that field try to develop models that explain the fluctuations in economic activity, as measured primarily by changes in GDP.
Each country prepares and publishes its own GDP data regularly.
In addition, international organizations such as the (also called economic bust).
In , the final users of goods and services are divided into three main groups: households, businesses, and the government.
One way gross domestic product (GDP) is calculated—known as the expenditure approach—is by adding the expenditures made by those three groups of users.