2-1: Measuring Economic
Activity
Goals
 Define gross domestic product.
 Describe economic measures of labor
 Identify economic indicators for consumer
spending.
Economic Measurements
 Productivity is output per
worker hour. In the workplace
it can be difficult to measure
productivity. In sports, there
are clear-cut measures.
Improvements in capital
resources, worker training, and
management techniques can
result in more output per
worker.
In the 1890s, the average
worker worked 60 hours/week!
Gross Domestic Product
The most widely used
measure is Gross
Domestic Product or
GDP.
It is the total dollar
value of all final
goods and services
produced using labor
& property in a
country during one
year.
“One way to find out
how well an
economy is doing is
to compare output
from year to year”
Components of GDP
Includes four major categories of economic
activity
1. Consumer Spending for food, clothing, etc.
2. Business Spending for buildings, equipment, and
inventory items
3. Government Spending to pay employees, buy
supplies and other goods and services.
4. Exports of a country less than the imports into a
country (net exports)
Services performed for self are not included in
GDP (mowing your own lawn)
Components of GDP
Comparing GDP
$17.4 trillion!
Increasing GDP usually signals a healthy
economy
Dollar value of GDP as a measure of
economic growth is not the best method
GDP per capita =output per person, or
GDP ÷ by the total population
Increase of GDP per capita signifies a
growing economy
Labor Activities
Workers of a country contribute to the
economy in several ways:
*Labor activities create needed goods and
services
*Wages they receive are spent to create
demand for various items
Employment
146.7 million working in U.S.
U.S. labor force consists of all people above
age 16 who are working/seeking work
Statistic of most concern is the
unemployment rate, (the portion of people in
the labor force who are not working)
The main cause of unemployment is reduced
demand for goods/services being provided by
various workers.
Employment
Some of the main reasons why employment
rate has be decreasing are:
– Demographics of the aging baby boomers,
whop are retiring, living longer, and impacting
this ratio;
– Technology/DotCom collapse eliminated lots of
malinvestment driven Tech jobs;
– Financial/Credit crash eliminated lots of
malinvestment driven banking/RE jobs;
– Ongoing outsourcing, globalization, etc.
– Robotics
Consumer Spending
Personal income refers to salaries and
wages as well as investment income and
government payments to individuals.
The U.S. Dept. of Commerce measures
retail sales, or the sales of durable and
nondurable goods bought by consumers.
Indicator of general consumer spending
patterns in the economy.
Check it Out!
http://www.bea.gov/
Releases:
– GDP by State
– Trade in Goods & Services
At a Glance:
– http://www.bea.gov/newsreleases/glance.htm
http://www.esa.doc.gov/
http://en.wikipedia.org/wiki/List_of_countries_by
_GDP_(PPP)
Labor Stats
http://www.bls.gov/
National rate?
How is MI doing?
Consumer Price Index
http://www.dol.gov/
Now it’s time to……….
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