Gross Domestic Product

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Gross Domestic Product, or GDP, is the value of all final goods or services produced in an economy in a given year. It is split into four different components: consumption, investment, government spending, and net exports. Consumption is 66% of GDP, and is divided into three separate parts: durable goods, nondurable goods, and services. Investment is 17% of GDP, and is divided into four separate parts: residential construction, nonresidential construction, purchase of capital equipment, and changes in inventories. Government spending is also 17% of GDP, and is divided into three separate parts: state spending, local spending, and federal spending. Net exports is around 1% of GDP, and is calculated by subtracting imports from …show more content…
It was also reported that the median sales price of new houses sold in February was down 18% from February 2008, which is the biggest year-to-year decline in history. An intriguing statistic comes from the Mortgage Bankers Association, which stated that the number of Americans applying for home loans has increased 30%. The Commerce Department reported that initial construction of US houses increased in February, up 22% from January, its first increase since July; however housing starts are still down more than 47% from February 2008. Housing numbers are starting to look better, and economists believe that the industry has finally bottomed out.
The second part of investment is nonresidential construction. Nonresidential construction includes business and commercial construction. According to the Commerce Department, US construction spending fell 3.3% in January to $986.2 billion, the lowest it has been since June 2004. It fell 2.4% in December 2008, and experts were expecting only a 1.5% decline in January. Compared to January 2008, construction spending is down 9.1%. Also, nonresidential private sector spending fell 4.3% in January, after a 2.4% decline in December. According to the article entitled “Construction Spending at Four-Year Low,” nonresidential construction