Gross Domestic Product or GDP defined as “the value of the goods and services generated within a country.” GDP is believed to provide a measurement of a country’s overall economic output and also helps to determine the national income. The U.S. was severely impacted by a recession as it hit in 2008. The GDP for the year 2008 was just above $14 trillion, -.3% (0%, .4%) and by the end of the fourth quarter in 2008, GDP was -8.9% (-6.8%, -5.4%); it had fallen 6.4%. This was mainly due to economic issues faced by the United States in 2008 that included decreased GDP as well as a loss of a substantial loss in jobs.
Real GDP, also referred to as “constant-price, inflation-corrected or of the constant-dollar GDP,” is a measurement of the value of services and good in a year. Since 2008, real GDP has continued to increase gradually and is predicted to continue to increase by the BEA.
GDP should not be heavily relied upon to when it comes to an accurate measurement of the overall well-being of society. This is because GDP measurements fail to address the distribution of income and it does not include all of the economy’s economic activities.
My home state, Georgia, was one of the 12 states that had a decline in its GDP in 2008. According to BEA, Georgia’s GDS dropped by 0.8% last year, as well. This is primarily due to declines in manufacturing and construction.
National income is defined as “the total value of all services and goods that are produced within a country and the income that comes from abroad for a particular a particular period, normally one year.” I suppose the primary difference between GDP and NI is the fact that GDP measures the value of services and goods that are generated within a country while NI measures the value of services and goods that are produced within a country along with the income that comes from others countries or abroad. Since 2008, when NI was $12609.1 billion, there has been a gradual increase in GDP and along with that came a gradual increase in NI. This is mainly due to increased government spending, professional services and trade.
Disposable income, also known as discretionary income, is the amount of money that households have that is available for spending and/or saving after tax deductions. Household disposable incomes, approximately $30K per household, grew about 1% between 2008 and 2009. In 2009, disposable income rose primarily because of low interest rates in the housing market and an increase in social benefit payments and lower tax rates.
Difference Between GDP and National Income. (2012). Retrieved from http://differencebetween.net/business/dinance-business-2/difference-between-gdp-and-national-income/#ixzz2Cs10hOAb
BEA GDP News Release for Third Quarter, 2008. (2008). Retrieved from http://www.bea.gov/newsreleases/national/gdp/2008/gdp308a.htm
BEA, Measuring the Economy: A Primer on GDP and the National Income and Product Accounts. (2012). Retrieved from http://www.bea.gov/national/pdf/nipa_primer.pdf