Gross domestic product

Understand the idea

Real GDP adjusts for price changes; nominal GDP does not. Growth rates may be annualized or year-on-year, which are different comparisons. GDP is not a complete measure of well-being, distribution or environmental costs.

An example

A real GDP growth figure adjusts for changes in prices.

Connected ideas

• A useful distinctionInflation

  Real measures adjust for price changes.

• Related measure or componentFiscal deficit

  GDP provides a denominator for comparing fiscal measures.

In the news

WTO lifts goods-trade forecast as AI investment offsets disruption

U.S. second-quarter GDP growth revised to 2.2% annual rate