GDP Growth & Recessions
Your Guide to Economic Growth & Recessions
Frequently Asked Questions
What is gross domestic product (GDP)?
Gross domestic product (GDP) measures the value of all final goods and services produced in a country and is a popular indicator of an economy’s health.
What is the gross domestic product (GDP) of the United States?
The gross domestic product (GDP) of the U.S. is worth trillions of dollars. It fluctuates quarter to quarter and year to year. For example, in the first quarter of 2021, nominal GDP was $22 trillion, and in the first quarter of 2022, it was $24.3 trillion.
How do you calculate gross domestic product (GDP) per capita?
GDP per capita is calculated by dividing a country’s GDP by its population at that time. In the first quarter of 2022, U.S. GDP per capita was $59,297, according to the Federal Reserve Bank of St. Louis.
How does gross domestic product (GDP) differ from gross national product (GNP)?
Gross domestic product (GDP) is the value of all final goods and services produced in a country. Gross national product (GNP) is the value of all goods and services produced by only residents of the country, regardless of where they’re located. GNP was used as the primary measure of production in the U.S. until 1991, when GDP took its place.
What causes a recession?
Recessions are often caused by an overheated economy. Inflation may rise, unemployment rates may drop below natural levels, and demand may outweigh supply. Whenever there is an economic expansion it is surely to be followed by a recession. This is a natural part of the business cycle. Other factors can also come into play, such as a pandemic, as seen in 2020.
How long do recessions last?
Recessions can last for months or years, depending on how drastic the economic downturn is. For example, the 2020 recession technically only lasted for two months, the shortest on record, while the Great Recession between 2007 and 2009 lasted 18 months.
Which agency determines when recessions begin and end?
The National Bureau of Economic Research (NBER) determines exactly when a recession begins and when it ends in the U.S. The NBER Business Cycle Dating Committee identifies the peaks and troughs that mark the start and end of recessions.
How many recessions has the U.S. had?
According to the National Bureau of Economic Research (NBER) Business Cycle Dating Committee there have been over 30 recessions in the U.S. since 1857. In the 21st century alone, there have been three recessions in the U.S.
A recession is a significant decline in economic activity, lasting more than a few months. There's a drop in the following five economic indicators: real gross domestic product, income, employment, manufacturing, and retail sales.
A stimulus check is a direct payment made by the government to its citizens. Unlike tax credits, which come as deductions from taxes owed during tax filing, stimulus checks are designed to give immediate relief to taxpayers and encourage stability and spending during an economic downturn.
Real gross domestic product (GDP) is a measurement of economic output that accounts for the effects of inflation or deflation. It provides a more realistic assessment of growth than nominal GDP. Without real GDP, it could seem like a country is producing more when it's only that prices have gone up.
Economic growth is an increase in the production of goods and services over a specific period. To be most accurate, the measurement must remove the effects of inflation.
Nominal Gross Domestic Product
Nominal gross domestic product (GDP) is a measurement of economic output that doesn't adjust for inflation. GDP measures everything produced by all the people and companies within a country's borders. When you hear reports of a country’s GDP that don’t specify the type, it's likely to be nominal GDP.
An economic contraction is a decline in national output as measured by gross domestic product (GDP). That includes a drop in real personal income, industrial production, and retail sales. It increases unemployment rates.
An economic depression is a severe downturn that lasts several years. Fortunately, the world has only experienced one economic depression. That was the Great Depression which lasted for 10 years. The decline in the gross domestic product (GDP) growth rate was bigger than anything experienced since then.
Boom and Bust Cycle
The boom and bust cycle is the alternating phases of economic growth and decline. It's another way to describe the business cycle or economic cycle.
Double Dip Recession
A double-dip recession occurs when an economy enters recovery from a recession but then is derailed and slides back into a recession. While it's rare, it can happen. There have only been two of them since the Great Depression.
A K-shaped recovery is when different communities experience different rates of recovery after a recession. The term refers to the shape this type of recovery makes when plotted on a line graph. The portion of the population that recovers quickly is represented by the upper part of the K, while the lower part represents those groups that recover more slowly.
Bureau of Economic Analysis. "National Data: National Income and Product Accounts: Table 1.1.5 Gross Domestic Product."
Federal Reserve Bank of St. Louis. "Real Gross Domestic Product Per Capita."
National Bureau of Economic Analysis. "US Business Cycle Expansions and Contractions."
U.S. Census Bureau. "U.S. Census Bureau History: 1929 Stock Market Crash."