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The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities, Second Edition by Bernard Baumohl

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How Is It Computed?

The GDP report has been a work in progress since the late 1930s, which makes it one of the longest running economic indicators around. Calculating the GDP is a mammoth undertaking because we're talking about a $13.5 trillion economy (as of 2007). The main responsibility for this task falls on the nonpartisan Bureau of Economic Analysis, which is well suited for the job given its history and experience.

The GDP series is really part of a marvelous national accounting system known as the National Income and Product Accounts (NIPA). That may be a mouthful to say, but the idea behind it is actually quite simple. In essence, the NIPA is composed of two complementary methods of estimating GDP. One side of the ledger is the product ...

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