For Immediate Release
Contact: Valerie Durham, [email protected]
U. S. ECONOMIC ACTIVITY JUMPS SHARPLY IN 2ND QUARTER 2014
Washington, DC (Friday, November 14, 2014): Gross Output, a broader measure of U. S. economic activity published by the Bureau of Economic Analysis, advanced to nearly $30.9 trillion in the second quarter of 2014, a 4.8% jump in real terms (annualized). The GO data released by the BEA can be found at http://www.bea.gov/iTable/
Gross Output (GO) is a measure of sales or receipts of all industries throughout the production process, including business to business transactions.
GO advanced slightly faster than GDP. Gross Domestic Product (GDP), which measures the value of final goods and services only, rose 4.6% in real terms to $17,328.2 billion in the second quarter.
“The GO data demonstrates that the economy recovered sharply from the slowdown in the first quarter,” stated Mark Skousen, editor of Forecasts & Strategies, who champions Gross Output as a more comprehensive measure of economic activity. He first introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990). Now the BEA publishes GO on a quarterly basis in its “GDP by Industry” data.
“Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and demonstrates that business spending is booming and is more significant than consumer spending,” he says. “By using GO data, we see that consumer spending is actually less than 40% of economic activity, not the 70% figure that is reported by the media.”
Skousen also notes that during downturns GO tends to fall faster than GDP, while during expansions GO rises faster than GDP.
Skousen points out that GDP leaves out a big part of the economy, business to business transactions in the production of intermediate inputs. According to Skousen’s calculations, business intermediate expenditures (IE) jumped an annualized rate of 20% to $21.4 trillion in the 2nd quarter. “That’s good news for the economy and the stock market,” he said.
For More Information
For more information on Gross Output (GO), Intermediate Expenditures (IE) and their relationship to GDP, see the following:
Mark Skousen, “At Last, a Better Way to Economic Measure” lead editorial, Wall Street Journal, April 23, 2014: http://on.wsj.com/PsdoLM
Steve Forbes, Forbes Magazine (April 14, 2014): “New, Revolutionary Way To Measure The Economy Is Coming — Believe Me, This Is A Big Deal”: http://www.forbes.com/sites/
Mark Skousen, Forbes Magazine (December 16, 2013): “Beyond GDP: Get Ready For A New Way To Measure The Economy”: http://www.forbes.com/sites/
To interview Dr. Mark Skousen on this press release, contact Valerie Durham, Media Relations at [email protected].
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