Washington, D.C. — Gross Output (GO), a broadened measure of U.S. economic activity, advanced to nearly $30.9 trillion in the second quarter of 2014, a 4.8% annualized jump in real terms, the Bureau of Economic Analysis (BEA) reported today.
Gross Output, a measure of sales or receipts of all industries throughout the production process, includes business to business transactions, in contrast to Gross Domestic Product (GDP), which did not advance as strongly during the second quarter. GDP, which measures the value of final goods and services only, rose a slightly less robust 4.6% in real terms to reach $17,328.2 billion during the second quarter.
‚??The GO data demonstrates that the economy recovered sharply from the slowdown in the first quarter,‚?Ě said Mark Skousen, PhD, editor of Forecasts & Strategies, who champions Gross Output as a more comprehensive measure of economic activity than GDP. He first introduced Gross Output as a macroeconomic tool in his book, ‚??The Structure of Production,‚?Ě (New York University Press, 1990). The BEA now publishes GO on a quarterly basis in its ‚??GDP by Industry‚?Ě 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,‚?Ě Skousen said. ‚??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.‚?Ě
During economic downturns, Skousen said GO tends to fall faster than GDP. But during periods of economic expansion, GO rises faster than GDP, he added.
Read the rest of Paul Dykewicz’s column about Dr. Mark Skousen and the Gross Output statistic at Eagle Daily Investor.