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Welcome to my wall

Here we going to discuss and learn how GDP is used to track the health of a nation's economy and what exactly is Economic Growth and how do we measure it. We will have a look at many videos, images, and websites to have a better understanding of how Economic growth works and how countries find other ways to improve Economic Growth.

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The image expresses that the measurement of economic growth is measured in different ways around the world. Most countries measure economic growth each quarter, some use GDP and the world bank uses gross national income (GN) to measure economic growth.

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This Image reveals the real GDP Growth rate of each country during 2018 which was done by the international monetary fund World Economic Outlook Database. The image clearly shows countries with the highest percentage rates and the lowest percentage rates in different colors in 2018.

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This video hints that the world is in a tough spot with the whole Covid-19 pandemic slowing down economy and Growth, but this is not the same for every state in America. In places like Avimor's in 2020 growth, it appears that growth is at full speed and many people are either trying to buy or sell homes. There is a very high demand for homes in that area which is increasing the growth of the economy in that state.

I choose this video because we keep hearing bad news each day of companies going bankrupt and the global economy in very bad shape right now but there are still other markets that are benefiting from Covid-19 and as a result, the economy is doing good compare to other areas.

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Driving north on Highway 55, it's not to miss Avimor. This self-sustaining community has turned a lot of heads because of how they're constantly planning for the future. And even with COVID-19, it appears growth is full speed ahead.

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Driving north on Highway 55, it's not to miss Avimor. This self-sustaining community has turned a lot of heads because of how they're constantly planning for the future. And even with COVID-19, it appears growth is full speed ahead.

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This video gives ideas of how china is dealing with Covid-19 and what the Chinese government This video gives ideas of how china is dealing with Covid-19 and what the Chinese government is doing to increase economic growth. It looks like the construction industry is the major driver of the Chinese economy. China is the world's biggest c02 producer which is having a big impact on climate change.

I choose this video because in recent years china's economy is growing very fast and many countries like the USA are worried that they might be the next superpower in a couple of years. Countries like the USA see this as a threat and are doing whatever they can to slow down the Chinese economy.

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This video tells us how recycling can help drive the local economic growth and save the environment by diverting unnecessarily waste to the Landfill. There are many businesses that rely on recyclables and they support many jobs in the province. These companies use these common household products to create a new product.

I choose this video because saving the environment is very important, and people should start recycling more and buy fewer products that harm the environment.
The government should invest more in renewable energy and stop companies from depending on oil. Coal and Nuclear energy could harm the environment in the future.

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This video reveals that the economy is in a bad situation and the GDP shrink by 4.8% which is the highest decline in the economy. The economy is entirely tied to the virus, getting it to control and how quickly can people get tested, and finding a cure for it permanently. The virus has a major impact on the world economy which is hurting every business and slowing down the economy.

I choose this video because it gives us a clear message on how the world is suffering during this pandemic and it’s affecting everyone around the world. The only way for the economy to get back to normal will be to find a cure for the virus.

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This website explains what GDP is and why it's so important to Economists and Investors. GDP basically tracks the health of a country's economy and many investors use GDP to make decisions whether to invest their money in a country. Economists also use GDP to find whether the economy is going into recession or not.

I choose this website because it's less complicated and it explains very well how GDP is very important and how Economists and investors use it to determine the health of a country. It also talks about how the GDP of a country is calculated by adding the following figures together: personal consumption; private investment; government spending; and exports.

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Gross domestic product (GDP) is one of the most widely used indicators of economic performance. Gross domestic product measures a national economy's total output in a given period and is seasonally adjusted to eliminate quarterly variations based on climate or holidays. The most closely watched GDP measure is also adjusted for inflation to measure changes in output rather than changes in the prices of goods and services.

Annual GDP totals are frequently used to compare national economies by size. Policymakers, financial market participants, and business executives are more interested in changes in the GDP over time, which are reported as an annualized rate of growth or contraction. This makes it easier to compare annual and quarterly rates.

Real (inflation-adjusted) U.S. GDP increased by 3.2% on an annualized basis for the fourth quarter of 2023 compared to an increase of 4.9% in the third quarter of 2023.

Key Takeaways

Understanding Gross Domestic Product (GDP)

GDP measures the monetary value of goods and services produced within a country's borders in a given time, usually a quarter or a year. Changes in output over time as measured by the GDP are the most comprehensive gauge of an economy's health.

GDP figures are reported in the United States every month by the Bureau of Economic Analysis (BEA) both in nominal as well as real, or inflation-adjusted, terms. One month after the end of each quarter, the BEA releases an advance estimate of the previous quarter's GDP. In the two succeeding months, the second and third estimates are released. This information incorporates previously unavailable data.

While it is possible to deconstruct the GDP in various ways, the most common is to view it as the sum of a country's private consumption, investment, government spending, and net exports (or exports less imports).

The consumption and investment components of the GDP tend to be more reliable economic indicators than government spending or net exports. The 3.2% annualized increase in the third quarter of 2023 U.S. GDP was primarily the result of a jump in many areas, including consumer spending, investment in private inventory, government spending, and fixed investment in the residential and nonresidential industries.

Nominal vs. Real GDP

GDP can be expressed in nominal or real terms. Nominal GDP is calculated based on the value of the goods and services produced as collected, so it reflects not just the value of output but also the change in the aggregate pricing of that output. In other words, in an economy with a 5% annual inflation rate nominal GDP will increase 5% annually as a result of the growth in prices even if the quantity and quality of the goods and services produced stay the same.

3.2%

Real GDP, in contrast, is adjusted for inflation, meaning it factors out changes in price levels to measure changes in actual output. Policymakers and financial markets focus primarily on real GDP because inflation-fueled gains aren't an economic benefit.

To estimate real GDP, the BEA constructs chain indexes that allow it to adjust the value of the goods and services to the change in prices of those goods and services.

Measuring GDP

There are three primary ways of calculating GDP: first, by adding up what everyone earned (known as the income approach) or by adding up what everyone spent in a year (the expenditure method). Logically, both measures should arrive at roughly the same total.

The income approach, which is sometimes referred to as GDP(I), is the sum of the aggregate compensation paid to employees, business profits, and taxes less subsidies. The expenditure method already discussed is the more common approach and is calculated by adding private consumption and investment, government spending, and net exports.

Finally, GDP can be measured based on the value of the goods and services produced (the production or output approach). Because economic output requires expenditure and is, in turn, consumed, these three methods for computing GDP should all arrive at the same value.

In general, the following simplified equation is often employed to calculate a country's GDP via the expenditure approach:

BEA's estimates of U.S. GDP are based on national income and product accounts (NIPAs) for sectors including businesses, households, nonprofit organizations, and governments. NIPAs are compiled from seven "summary accounts" tracing receipts and outlays for each of those sectors. Detailed NIPA data also forms the basis for BEA GDP reports by state and industry.

GDP for Economists and Investors

GDP is an important measurement for economists and investors because it tracks changes in the size of the entire economy. In addition to serving as a comprehensive measure of economic health, GDP reports provide insights into the factors driving economic growth or holding it back.

Economic health, as measured by changes in the GDP, matters a lot for the prices of financial assets. Because stronger economic growth tends to translate into higher corporate profits and investor risk appetite, it is positively correlated with share prices. Conversely, stronger GDP growth can hurt fixed-income investments, like bonds, by making their returns less attractive on a relative basis.

While GDP reports provide a comprehensive estimate of economic health, they are not a leading economic indicator but rather a look in the economy's rear-view mirror. Markets track GDP reports in the context of those that preceded them, as well as other more time-sensitive indicators relative to consensus expectations.

What Is Real and Nominal GDP?

Real and nominal GDP are two different ways to measure the gross domestic product of a nation. Nominal GDP measures gross domestic product in current dollars; unadjusted for inflation. Real GDP sets a fixed currency value, thereby removing any distortion caused by inflation or deflation. Real GDP provides the most accurate representation of how a nation's economy is either contracting or expanding.

How Is Real GDP Calculated?

Real GDP is calculated by using a price deflator. A price deflator is the difference between prices in the current year that GDP is being measured and some other fixed base year. For example, if prices rose by 8% from the base year, the price deflator would be 1.08. The nominal GDP would then be divided by this deflator to reach real GDP.

What Is the Real GDP?

The real GDP of the U.S. as of the fourth quarter of 2023 was 3.2%. That's compared to an increase of 4.9% in the third quarter of 2023.

The Bottom Line

A single GDP number, whether an annual total or a rate of change, conveys a minimum of useful information about an economy. In context, it's an important tool used to assess the state of economic activity.

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What Is GDP and Why Is It So Important to Economists and Investors?

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Gross domestic product is one of the primary indicators used to gauge the health of a country's economy. But what does it actually measure?

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This website looks at how Canada's economy is slowly going back up since many businesses are opening back up and there are fewer restrictions than earlier, and, simply, that consumers and businesses have learned to operate in this new environment. Statistic Canada also reported that the economy grew in August as GDP rose by 1.2 percent in August.

I learned that Canadians and businesses are finding different ways to deal with the virus and also do whatever it can to stop the virus from spreading while doing everything to save their businesses from going bankrupt in the future.

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The Canadian economy grew in August as real gross domestic product rose by 1.2 per cent in August, Statistics Canada reported Friday.

That marked the fourth straight month of growth following the steepest drops on record back in March and April amid pandemic lockdowns. August's figure was down from the 3.1 per cent expansion seen in July.

The August number was still ahead of what forecasters had been expecting. According to financial data firm Refinitiv, economists had been predicting growth of 0.9 per cent for the month.

Despite the recent string of growth, overall economic activity is still about five per cent below February's pre-pandemic level, Statistics Canada said.

September growth is forecast

Preliminary information from Statistics Canada indicates real GDP was up 0.7 per cent in September, with increases seen in the manufacturing and public sectors, as well as in mining, quarrying and oil and gas extraction.

"This advanced estimate points to an approximate 10 per cent increase in real GDP in the third quarter of 2020," Statistics Canada said. Back in the second quarter, the country's GDP shrank by 11.5 per cent in the three-month period between April and June.

Assuming the economy contracts in October and November as a result of a resurgence of coronavirus cases, fourth-quarter GDP looks likely to undershoot the Bank of Canada's "tepid" forecast for a seasonally adjusted annual rate of one per cent, said CIBC Capital Markets senior economist Royce Mendes.

"It appears that the economy was slowing more than expected heading into the fourth quarter, and the most likely outcome now suggests that GDP barely advanced during the period," Mendes said in a commentary.

BMO chief economist Doug Porter said the way forward has been deeply clouded by the second wave and renewed restrictions, so growth will cool considerably in the fourth quarter.

"However, we suspect that with ongoing massive fiscal support, less restrictions than earlier, and, simply, that consumers and businesses have learned to operate in this new environment, the late-year setback should be relatively mild," Porter said. "In fact, we continue to expect modest growth overall for [the fourth quarter]."

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Canadian economic growth cools to 1.2% in August | CBC News

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The Canadian economy grew in August as real gross domestic product rose by 1.2 per cent in August, Statistics Canada reported Friday. That marked the fourth straight month of growth following the steepest drops on record back in March and April amid pandemic lockdowns.

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This website gives a little more detail about How an Economy is measured and there are 3 different ways to measure the growth of real GDP. It is important to know which is being used and to understand the differences between them. The three most common ways to measure real GDP are Quarterly growth at an annual rate, The four-quarter or "year-over-year" growth rate,  and the annual average growth rate.

I Learned that Each measure has strengths and weaknesses. But mixing up the measures can lead to results that may look confusing at first sight. The Bank of Canada uses average annual growth as a summary measure of broad trends.

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Economists use many different methods to measure how fast the economy is growing. The most common way to measure the economy is real gross domestic product, or real GDP. GDP is the total value of everything - goods and services - produced in our economy. The word "real" means that the total has been adjusted to remove the effects of inflation.

There are at least three different ways to measure growth of real GDP. It is important to know which is being used, and to understand the differences among them. The three most common ways to measure real GDP are:

Quarterly growth at an annual rate

The four-quarter or "year-over-year" growth rate

The annual average growth rate

Quarterly growth at an annual rate shows the change in real GDP from one quarter to the next, compounded into an annual rate. (This process is often called "annualizing.") For example, in the second quarter of 2001, the economy grew 0.1 per cent from the first quarter. If the economy had grown at that pace for an entire year, the annual growth would be 0.4 per cent. So the quarterly growth at an annual rate was reported at 0.4 per cent.

This measure is often used by the media. It does a good job of showing recent economic developments. But it also tends to be volatile (see bars in Chart). This is because the effects of any one-time-only factors during the quarter, labour disputes for example, become compounded when the rate is annualized.

The four-quarter, or "year-over-year" growth rate, compares the level of GDP in one quarter to the level of GDP in the same quarter of the previous year. For example, in the second quarter of 2001, GDP was 2.1 per cent above that in the second quarter of 2000. This measure is popular among businesses, who generally present their own quarterly earnings results on that basis to avoid seasonal variations. 1

The year-over-year growth rate tends to be somewhat less volatile than quarterly growth at an annual rate (see line on Chart). That is because the effect of any special factors does not get compounded. But it is also less timely, since it looks at what happened to the economy over the entire previous year, not just the past three months.

Finally, the annual average growth rate is the average of year-over-year percentage changes reported during a year. The November Monetary Policy Report indicates that the Bank expects the annual average growth rate for 2001 to be about 1.5 per cent. For the first half of 2001, the year-over-year growth rates as published by Statistics Canada are 2.5 per cent in the first quarter and 2.1 per cent in the second quarter. For the third and fourth quarters, a profile that is consistent with the expectations described in the November Report (say -0.5 per cent and 0 per cent, respectively at annual rates) yields year-over-year growth of 0.9 per cent in the third quarter and 0.5 per cent in the fourth quarter. Averaging the four year-over-year growth rates in 2001 gives the annual average growth rate of 1.5 per cent ( dashed bar in Chart).

* Projected growth rates incorporate " First Scenario" values.

Each measure has strengths and weaknesses. But mixing up the measures can lead to results that may look confusing at first glance. The Table below provides some examples that illustrate this. In the Table, the numbers for 2001Q1 and Q2 are as reported by Statistics Canada. For the next six quarters from 2001Q3 to 2002Q4 the numbers provide two illustrative scenarios designed to make a point. The illustrative scenario in the top panel is broadly consistent with the economic outlook described in the November Report: zero to slightly negative growth in 2001H2, 2 per cent growth in 2002H1, and 4 per cent growth in 2002H2. 2 The annual average growth rate for 2002 is 1.5 per cent. This sounds low, but as the quarterly growth at annual rates illustrates, to achieve this annual average requires a considerably stronger quarterly profile through 2002. The reason for this is that the annual average growth for 2002 is pulled down by the very weak growth in the second half of 2001.

To illustrate this point, the lower panel of the Table puts the quarterly growth at annual rates in 2001Q3 and Q4 arbitrarily at 3 per cent, while leaving the profile for quarterly growth at annual rates for 2002 unchanged. With this change to the second half of 2001, 2002 begins from a higher starting point so, while the quarterly profile in 2002 is the same as in the upper panel, the annual average growth rate is a full percentage point higher at 2.5 per cent.

The Table also illustrates another point. Note that in the upper panel the annual average growth rates for 2001 and 2002 are the same but the quarterly profiles in the two years are very different. Through 2001 growth decelerates, while in 2002 growth picks up through the year.

The Bank of Canada uses average annual growth as a summary measure of broad trends. Annual averages are also useful when comparing to other forecasters. However, the Bank uses the other measures to focus on shorter-term developments.

FIRST SCENARIO

2001 (illustrative after Q2)

2002 (illustrative)

SECOND SCENARIO

2001 (illustrative after Q2)

2002 (illustrative)

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Economists use many different methods to measure how fast the economy is growing. The most common way to measure the economy is real gross domestic product, or real GDP. GDP is the total value of everything - goods and services - produced in our economy.

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This website talks about how Toronto is Canada’s business and financial capital. The city is the second-largest financial services center in North America and it’s becoming a global destination location for financial services.  They mentioned that Toronto is one of the most competitive in major business sectors from technology to science and green energy. Toronto’s rich industrial diversity drives both growth and innovation.

I learned that Toronto makes the Canadian economy very strong and the Toronto growth is significantly outpacing the national average. The region’s GDP has grown by an average of 2.4 percent annually since 2009 compared to a national rate of 1.8 percent.,

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Toronto's success is due in large part to the strength and significant growth of its financial industry. Toronto is the second largest financial centre in North America, which serves as an engine for the economic growth of the city and an anchor for our excellent talent base, enviable quality of life and highly competitive business environment.
Jennifer Reynolds, President and CEO Toronto Finance International

Toronto is Canada's business and financial capital, a growing financial hub in North America, and a top ten global financial centre. Toronto's Gross Domestic Product (GDP) growth is significantly outpacing the national average. The Toronto region's GDP has grown by an average of 2.4 percent annually since 2009 compared to a national rate of 1.8 percent. In 2017, the Toronto region's GDP grew by approximately 3.3 percent ( Source: Conference Board of Canada, Moody's, Oxford Analytics, Statistics Canada, 2017).

Toronto is competitive in almost every other major business sector from technology and life sciences to green energy; from fashion and design to food and beverage; from film and television production to music and digital media. Toronto's rich industrial diversity drives growth, innovation and cross-sectoral synergies and knowledge spillovers have spawned new leading-edge hybrid sectors including med-tech, green-tech and food-tech.

Toronto is Canada's business and financial capital. The city is the second largest financial services centre in North America and has one of the highest concentrations of financial services company headquarters in the Americas. With its reputation for safety, soundness and stability, Toronto is fast becoming a global location destination for financial services.

Learn more about Toronto's Financial Services Sector.

Canada's banking system ranks first in the G7 for the 11th year and it is one of the soundest in the world.
-World Economic Forum, Global Competitiveness Index 2018 - 2019

Canada's average annual real GDP growth over the last five years (2014-2018) ranked second among G7 economies and is also forecasted to rank first in the G7 in 2020 at 1.9%.
-IMF World Economic Outlook, April 2019

Since May 2014, Canada created more than 1 million jobs, an increase of almost 7%, with over 88% of those being full-time positions.
-Statistics Canada, June 2019

Canada enjoys the lowest net debt-to-GDP ratio in the G7, and its ratio is expected to remain the lowest in 2020 at 26.2%.
-International Monetary Fund (IMF), World Economic Outlook, April 2019

Canada tops the G20 with Germany and Australia for its fiscal soundness, with a triple A credit rating.
- Standard & Poor's, Moody's and Fitch

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Toronto's success is due in large part to the strength and significant growth of its financial industry. Toronto is the second largest financial centre in North America, which serves as an engine for the economic growth of the city and an anchor for our excellent talent base, enviable quality of life and highly competitive business [...]

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What did you learn about your topic that surprised you the most?

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What did you learn about your topic that surprised you the most?

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I learned that there are different ways to calculate and measure the economic growth of a country and Economists and Investors used these to figure out if the Economy of the country is a bad shape or not.

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Provide a real-life example of how this topic is relevant or interesting for you

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Provide a real-life example of how this topic is relevant or interesting for you

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This topic is relevant because nowadays the economy is in a very bad situation due to Covid-19 and we can use GDP to figure out how much the virus is affecting the economy. It's interesting to see if the economy will recover in the next few years or will it keep going down into a rescission.

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If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

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If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

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The important thing to pass on is that work hard and keep moving forward even in these tough times during pandemic.