Glossary

Gross domestic product

The total market value of all final goods and services produced within a country in a given period, the main measure of economic output.

Also called: GDP, real GDP, nominal GDP

Gross domestic product (GDP) is the total value of finished goods and services produced within a country's borders in a given period, usually a quarter or a year. In the United States the Bureau of Economic Analysis publishes it. It can be calculated by adding consumption, investment, government spending and net exports.

Nominal GDP uses current prices; real GDP adjusts for inflation and is used to measure growth. Per-capita GDP divides output by population and is used as a rough indicator of living standards. A recession is often, though not formally, described as two consecutive quarters of falling real GDP.

GDP has well-known limits. It counts market production but omits unpaid work such as housework, does not measure distribution, environmental damage or leisure, and counts some spending that may not improve well-being, such as repairing disaster damage. Government spending is included but the value of public services is measured by cost. Critics on various sides suggest additional measures. Despite this, it is the most widely used indicator in discussing growth, and it is the denominator in measures like the Debt-to-GDP ratio.

Last reviewed November 8, 2026

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Related terms

Recession A significant, widespread decline in economic activity lasting more than a few months, often marked by falling output and rising unemployment. Debt-to-GDP ratio Federal debt measured as a share of the economy's annual output, used to judge whether borrowing is sustainable. Unemployment rate The share of people in the labor force who are jobless and actively seeking work, reported monthly by the Bureau of Labor Statistics. Inflation A sustained increase in the general level of prices, reducing the purchasing power of money. Fiscal policy The use of government taxing and spending to influence the economy, set by Congress and the president.