GDP Growth Rate (United States)

The same total can be reached three ways. The expenditure approach sums what is spent (C + I + G + NX). The income approach sums what is earned in production (wages + profits + rents + interest + taxes less subsidies) and is published separately as Gross Domestic Income (GDI). The production, or value-added, approach sums the value each industry adds at every stage. In theory all three are identical; in practice a small statistical discrepancy remains.

To strip out inflation, nominal GDP is divided by the GDP deflator. Unlike CPI — which tracks a fixed basket of consumer goods — the deflator covers everything counted in GDP, including investment goods, government services and exports. That makes it the broadest gauge of economy-wide prices, and the reason real growth figures rely on it rather than CPI.

GDP counts market transactions, so it misses unpaid household and care work, volunteering and the informal (shadow) economy. It says nothing about how output is distributed, treats environmental damage and resource depletion as costless, and can even rise with spending on disasters or pollution clean-up. A higher GDP therefore does not automatically mean higher welfare — which is why it is read alongside measures like GDP per capita, median income and the Human Development Index.

GDP is defined by location — output produced inside the borders. Gross National Product (GNP), now usually reported as Gross National Income (GNI), is defined by ownership — income earned by a country's residents wherever it is produced. For most large economies the two are close, but they diverge where foreign investment income or remittance flows are large (Ireland, for instance, where GNI sits far below GDP).