GDP: The Perfectly Imperfect Measurement
Gross domestic product (GDP) is likely the most featured, argued over, concerning, and sometimes even misleading economic indicator. A measure of the value of all final goods and services produced in an economy, GDP is as important as it is imperfect. The annual growth in GDP, expressed as a percentage, is our proxy for how the economy is doing. But it is not a definitive metric for economic well-being; it is compromised by a number of shortcomings.
There are two ways to measure GDP: real and nominal. Real GDP is the figure we hear most, that number bandied about quarterly or at the end of a year as the measure of the country’s economic progress. “Real” is considered the better measurement of ...
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