International Finance Theory and Policy
by Steven M. Suranovic

Finance 5-4 ('01-'02)

The US National Income Statistics (2001-2002)

The following table contains US statistics for the national income and product accounts for the years 2001 and 2002. The information source on the web is: http://www.bea.doc.gov/bea/dn1.htm as of January 2004. The table provides the numerical breakdown of GDP not only into its broad components (C,I,G, etc.) but also into their major subcategories. Thus, as an example, consumption expenditures is broken into three main subcategories, durable goods, non-durable goods and services. The left hand column indicates which value corresponds to the variables used in the identity. Click here to see these same GDP figures for the years 1996-1997.

 

US Gross Domestic Product

(billions of dollars)

    2001 2002 2002

% of GDP

GDP Gross domestic product 10,100.8 10,480.8 100.0%
C Personal consumption expenditures 7,045.4 7,385.3 70.5%
  Durable goods 881.9 911.3 8.7%
  Nondurable goods 2,013.6 2,086.0 19.9%
  Services 4,149.8 4,388.0 41.9%
I Gross private domestic investment 1,607.2 1,589.2 15.2%
  Nonresidential 1,174.1 1,080.2 10.3%
  Structures 322.1 266.3 2.5%
  Equipment and Software 852.0 813.9 7.8%
  Residential 469.2 503.7 4.8%
  Change in business inventories -36.1 5.4 0.1%
G Government consumption expenditures and gross investment 1,814.7 1,932.5 18.4%
  Federal 612.9 679.5 6.5%
  National defense 393.0 438.3 4.2%
  Nondefense 219.9 241.2 2.1%
  State and local 1,201.8 1,253.1 12.0%
EX Exports 1,035.1 1,006.8 9.6%
  Goods 731.5 697.8 6.7%
  Services 303.6 309.1 2.9%
IM Imports 1,401.7 1,433.1 13.7%
  Goods 1,168.0 1,190.3 11.4%
  Services 233.6 242.7 2.3%

There are a number of important things to recognize and remember about these numbers.

First, it is useful to know that US GDP in 2002 is just over $10 trillion, (or $10,000 billion). This is measured in 2002 prices, thus it is referred to as nominal GDP. This number is useful to recall, first because it can be used in to judge relative country sizes if you happen to come across another country's GDP figure. Also, the number will be useful in comparison with US GDP in the future. Thus, if in 2010 you read that US GDP is $20 trillion, you'll be able to recall that back in 2002 it was just $10 trillion. Also note that between 2001 and 2002, the US added almost $400 billion to GDP.

The next thing to note about the numbers is that consumption expenditures is the largest component of US GDP, making up almost 71% of output in 2002. That percentage is relatively constant over time, even as the economy moves between recessions and boom times. (Although it is up from 68% in 1997) Also notice that services is the largest sub-category in consumption. This category includes health care, insurance, transportation, entertainment, etc.

Gross private domestic investment, investment for short, accounted for just over 15% of GDP in 2002. This component of GDP is often the target of considerable concern in the US. Investment represents how much the country is adding to the capital stock. Since capital is an input into production, the more capital equipment available, the greater will be national output. Thus, investment spending is viewed as an indicator of future GDP growth. Perhaps, the higher is investment, the faster the economy will grow in the future.

One concern about the US investment level is that as a percentage of GDP, it is lower than in many countries in Europe and especially in Japan. In many European countries it is above 20% of GDP. In Japan the investment figure is closer to 30%. There was a fear amongst some observers, especially in the 1980s and early 90s, that lower US investment, relative to the rest of the world, would ultimately lead to slower growth.

That this projection has not been borne out, especially in light of Japan's almost non-existent GDP growth during the 1990s, should indicate that higher investment is not sufficient to assure higher growth.

Government expenditures on goods and services in the US amounted to just over 18% of GDP in 2002. Recall that this figure includes, state, local and federal spending but excludes transfer payments. When transfer payments are included, government spending plus transfers as a percentage of GDP exceeds 30% in the US.

Two things are worth noting. First, note that state and local spending is almost twice the level of federal spending. Second, most of the federal spending is on defense related goods and services.

Exports in the US accounted for almost 10% of GDP in 2002 (down from 12% in 1997) and is just over the $1 trillion level. Imports into the US are almost $1.5 trillion and amounts to almost 14% of GDP. In terms of the dollar value of trade, the US is the largest importer and exporter of goods and services in the world. However, relative to many other countries, the US trades less as a percentage of GDP.

International Finance Theory and Policy - Chapter 5-4: Last Updated on 1/11/04

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