A Special Joe Primer
If you get foggy at the mention of interest rates, or bleary-eyed while trying to wade through an article in the Wall Street Journal, we've written this page for you: a bare-bone primer on the major numbers economists throw around.
GDP (Gross Domestic Product) is the most common number used to show how large – and also how strong - a nation's economy is. It is the dollar value of all goods and services a nation produces, including those produced abroad. Sometimes you'll see GDP per capita – or person – to show how comparatively rich or poor a nation is. GDP growth tells how fast an economy is growing, which – for many economists – is the ultimate sign of a healthy economy.
GDP: $14.4 trillion (2008) BEA
The current GDP (as of the 2nd Quarter of 2009) is estimated to be $14.4 trillion.
GDP growth over the years
GDP Growth Per Person over the years
Since the nation's population keeps growing, GDP growth per person is slightly less.
source: ERS (excel file)
Inflation and the Consumer Price Index (CPI).
Inflation is the rising costs of goods. The most common way it's measured is the CPI. CPI looks at a “basket of goods” that people generally buy and tracks how much those goods rise in cost. Some inflation is seen as a good thing: "deflation" or "stagflation" (prices going down or staying put) are signs of a slowing economy, whereas "hyerperinflation" (prices rising too fast) can destabilize the economy.
Inflation: 3.4% (2004-2005) BLS
Inflation over the years
Unemployment rate is the percentage of people who are in the workforce (people working or looking for work) who are out of a job. Since jobs are always turning over, a small unemployment rate of 5% is seen as normal and healthy. Some economists, however, say that the unemployment rate is not the best way to track how well theworkforce is doing, because people who give up looking for work or who are accepting lower wages are not included in the tally. See also our unemployment fact page.
Unemployment rate: 4.8% (July, 2006) BLS
Unemployment rate over the years
Job growth isusually spelled out in the number of new jobs added to the economy each month/year. Because the workforce keeps growing, the economy needs about 150,000 new jobs a month just to keep even.
Job growth over the past couple of years
Poverty startedbeing measured in 1959 to track the number of people who lacked the basic necessities to get by. The current formula used to set the poverty level was developed in 1963; it figures out how much it costs to feed a family and multiplies that number by three, since in 1963 families spent about a third of their income on food.
Critics of the poverty formula come from both sides. The left says the formula underestimates how much it actually costs to live, particularly in more expensive urban areas. The rights says the national poverty figures are at odds with stats that show the poor are living better than they were 30 years ago; they say the temporary status of poverty along with other benefits probably explain why. Also see our poverty facts page.
Poverty rate: 12.7% of all Americans (2005)
Over the years
Interest Rates – and the “federal interest rate.” Interestrates, for our readers lucky enough to never borrow money, are the rates a lender charges you when you take out a loan (in any form – student loan, mortgage, credit card balance). The “federal interest rate” or “discount rate” is the rate at which banks borrow from the fed. Although it doesn't dictate how much interest banks charge their customers, it usually has a strong influence – so when the fed's rate goes up, interest rates in general go up too. (But not always – for a good primer on how interest rates work, see the ChicagoFed.)
Primary interest rate: 1%
Interest rate levels over the past three years
Trade deficits - or the "current account deficit" - happen when a country imports more goods than it exports. Nations generally like to avoid trade deficits – because they have to borrow money to make up the shortfall – but some argue a trade deficit is only a natural by-product of globalization. (Note: the trade deficit is not the same as “the budget deficit” – which is how much more our government spends each year than it raises in taxes. For more on the deficit, see our debt and deficit page.)
Trade deficit: $811 billion (2006) BEA
Trade deficit as a percentage of GDP over the years (the graph shows the "balance of current accounts" - anything above zero is a trade surplus and anything below is a trade deficit)
Where the numbers are from:
BEA - Bureau of Economic Analysis
BLS - Bureau of Labor Statistics
CBO - Congressional Budget Office
Fed - Federal Reserve
- ERS - Economic Research Service
Other primers out there:
- Backgrounders from the Economist
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