Investor CAFÉ

Latest Gross Domestic Product Growth Shows Value of Using Gross Output

Stocks sold off sharply today. Finally, the much anticipated correction is happening, but I don’t see any fundamental reason for the decline. It’s purely a technical correction.

Real gross domestic product (GDP) rose in the 2nd quarter at a 4% annualized rate as a sharp improvement from the negative GDP announced in the first quarter.

The latest growth number was no surprise to Joel Stern, an adjunct finance professor at several universities and a perennial speaker at the FreedomFest conference that I chair each July in Las Vegas. Stern predicted 4% annual U.S. GDP growth this year, despite the government’s report that GDP shrank in the first quarter.

As a champion of the federal government’s decision to begin reporting the Gross Output (GO) statistic on a quarterly basis earlier this year, I consider the latest variation of the GDP reading from the first quarter to the second quarter as evidence of the value of having an alternative indicator for economic growth. The GO statistic includes business-to-business commerce, so it is a broader indicator than GDP, which excludes such activity.

Read more about how the latest data shows the value of gross output at Eagle Daily Investor.

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