1.1.1.2 Important Coincident Indicators
Gross domestic product (GDP). GDP measures the dollar value of all the finished goods and services produced within the geographic boundaries of a country. The Bureau of Labor Analysis has divided the GDP into four major components. The largest component, at around 70%, is personal consumption expenditures, which consists of all consumption goods and services sold within the U.S. The second component is business investment, which consists of purchases by companies to produce consumer goods. These include new business equipment, inventory orders, and housing construction. The third component is government spending, which is about 20% of GDP. Imports and exports are the fourth component of GDP. Exports add to the GDP, while imports subtract from GDP. GDP is the statistic that is most commonly used for identifying business cycles and for determining whether the country is in a recession or depression.
Gross
