Go to the Bureau of Economic Analysis website, www.bea.gov, and access the BEA i

Question

Go to the Bureau of Economic Analysis website, www.bea.gov, and access the BEA interactively by selecting "National Accounts" and then "National Income and Product Account Tables." Select "Frequently Requested NIPA Tables," and find Table 1.1.1 on GDP. What is the current GDP growth rate for the U.S.? Examine the trend over the past few years. What trends interest you? What stage of the Business Cycle would the U.S. economy be in currently given the trends? Why might GDP not be considered an accurate measure of economic well-being of a country? Identify at least three limitations of GDP as a measure of economic well-being

Explanation / Answer

From Table 1.1.1, the 3rd Quarter 2011 GDP growth rate is +2.5% Viewing the Chart to examine the trend, we see that GDP growth has increased from -7% in early 2009, becoming positive in mid-2009, stabilizing at about +4% from the end of 2009 to mid-2010, dipping again near zero at the beginning of 2011 and slowly increasing up to the present. From this data, it is apparent that the economy is in a slow recovery from a steep recession. GDP fails to take into account many factors that would measure economic well-being of a country. GDP does not account for intangible values, such as feelings of security, it does not account for quality of life such as environmental, health and family factors. It also only focuses on economic activity that occurs in the normal markets, and does not include unpaid labor, and black market activity.

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