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 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 $17.4 trillion!

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 U.S. labor force U.S. labor force consists of all people above age 16 who are working/seeking work U.S. labor force 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 million working in U.S.

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;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! Releases: –GDP by State –Trade in Goods & Services At a Glance: – _GDP_(PPP) _GDP_(PPP)

Labor Stats National rate? How is MI doing? Consumer Price Index

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