We are all well-aware that the U.S. produces a lot of stuff. Economists refer to all this stuff as the Gross Domestic Product or GDP. (GDP is more formally defined as the market value of all final goods and services produced within a country.)
In 2010, the US’s GDP was valued at more than $13 trillions, more than six times the amount made in 1950. But, as the chart below illustrates, the growth rate has not been steady, to say the least. As we are all too well aware, GDP expansions are followed by recessions (economists define recessions as two or more consecutive quarters of negative GDP growth). During a slowdown, businesses have more difficulty selling their products, they hire fewer workers and lay people off, and some businesses shut down.
According to the National Bureau of Economic Research, since 1950 there have been ten rounds of expansions and contractions. The most recent economic crisis that began in late 2008 is the most severe since the Great Depression.
Of course, economists and policymakers disagree vehemently about how to pull the economy out of a recession. CPE economists tend to believe that increasing government spending (beyond either Obama’s stimulus plan or his Jobs plan) and reinstituting a progressive tax structure. See Economic Find: Are Americans Overtaxed?
Based on the 2006 Field Guide to the US Economy. “The Ups and Downs of GDP.” 9.1: 147.
Updated and Revised by Member Economists Zhongjin Li and Sue Holmberg
October 2011
Data Source:
US Bureau of Economic Analysis
Source:
The National Bureau of Economic Research “Business Cycle Expansions and Contractions.” http://www.nber.org/cycles.html.
