US Gross Domestic Product (GDP)

The Bureau of Economic Analysis makes monthly updates to data which typically cause minor changes for the past several years.

Recent

Annual Rates of Change of GDP Components

Consumption and Investment

Consumption, which is 68% of total GDP and by far the largest component, and Investment, which is 18% and similarly sized to Government (next chart) which is 17%.

Government and Exports

Government spend is 17% of GDP, and Net Export, which is Exports minus Imports accounts for the last 3%.

While small in dollars, it can contribute significantly to growth or contraction of total GDP. We're going to look only at Exports, not Imports.

Historical

Research Summary and Editorial

Upon exploring ninety-five years of US GDP history, the claim by former president Trump that his economy was the best and the current is the worst cannot be supported through any intelligent interpretation of historical data. Through this measurement, I can only conclude that his economic claims are more of his typical repetitious fictional banter that form the disinformation library, upon which talking points are formed and disseminated among an undiscerning party and electoral base. I will, however, continue to explore additional economic measurements to exhaust a complete perspective.

What is GDP?

Gross domestic product, or GDP, is the most widely accepted measurement of the health of a nation's economy. It is comprised of four major components:

1. consumption (C) -- represents private-consumption expenditures by households and nonprofit organizations
2. investment (I) -- refers to business expenditures by businesses and home purchases by households
3. government spending (G) -- denotes expenditures on goods and services by the government
4. net exports (NX) -- represents a nation’s exports minus its imports

Each of the major components have sub-components, which also have sub-components, etc. In fact, the data used to create GDP are compiled at a very granular level. Links to additional learnings are here: Gross domestic product

How do we measure GDP and changes in GDP?

The four components (C, I, G, and NX) can be referred to in nominal or real terms. Real terms are nominal measurements adjusted for inflation. This is critical for comparing growth from one year to the next (YOY or YOY Δ). For example, if GDP increased from 100 in 2020 to 110 in 2021, at first glance it looks like GDP increased by 10% YOY. If inflation was 5% YOY, however, then real GDP growth was actually only 5%.

The below table show's a real example (in billions of US $) (using BEA update from 2024-09-26):

Year	Nominal GDP	%	Real GDP	%
2020	21,354.1		20,267.6
2021	23,681.2		21,494.8
YOY Δ	2,327.1	+10.9	1,227.2	+6.1

How do we interpret GDP and GDP Δ measurements?

• First, it is important to acknowledge the relative size of each of the four components:

1. C = ~68%
2. I = ~18%
3. G = ~17%
4. NX = ~-3%

The relative sizes of these major components have been consistent for most of the past century:

• Having established the relative size and influence each component has on total GDP, I'm going to add some opinion as to the meaning and importance of each:

1. Investment -- Most western economies have elements of both capitalist and socialist influence. Compared to other nations, the United States skews more towards a capitalist economy. It is within this context, that I rank Private Investment as the most important of the four major GDP components. When private individuals and companies are willing to invest or put their personal capital at risk, they are signaling a high degree of confidence in the future economy and thus their ability to profit in the future from the risks they make today.
2. Consumption -- While overwhelmingly the largest component and two and a half times the size of Investment, I consider this second in importance. Certainly, consumers' confidence in the current and future economy largely drive consumption of goods and services, there are factors that can influence this figure such as:
   1. Inflation, which generally creates a pull-forward mentality (hurry up and buy now before prices go higher)
   2. Consumers have a history of spending outside of their means -- taking on debts they cannot repay
   3. Compared to the risk and long term nature of investment, consumption is more of a present indicator than a forward looking indicator
3. Government -- While about the same size as Investment, in the context of the health of a largely capitalist economy, increases in government spending should be viewed with criticism. It is in this context that I will analyze and rank increases in government spending inversely, meaning, high YOY increases are undesirable and decreases favored. For a capitalist economy, stable or decreasing government spending while increases in investment and consumption contribute to an overall growing GDP are the best-case scenario. Additional context to consider:
   1. Currently, increases in government spending in western nations are largely unfunded, meaning public debt is incurred to fund the increases -- another negative perspective.
   2. Governments have the ability to spend money when consumption and investment are low or contracting, or for other reasons that support the security and welfare of a nation. Consider:
      1. Spikes in government spending during our involvement in World War II (very evident in the chart above) and Vietnam War
      2. Increases in government spending to fund public projects during poor economic conditions is a valuable tool governments use to help jumpstart stalled or declining economies, some examples include:
         1. 1930s following the Great Depression
         2. 2009 following the Financial Crisis
         3. 2019 during Covid when parts of the economy were shutdown
4. Net Export -- While a real contributing factor to YOY changes in GDP, and worthy of it's own studies, I will not be considering the impacts of this component because of it's small relative size. For perspective, however, in a global economy, the ideal state would be a situation where net imports and exports are zero, meaning a country imports the same amount of goods and services that it exports. This would signify the fairest trade among all nations. The reality, however, is that deficits, which the US has run for several decades, have been largely caused by using cheaper labor overseas to build the goods that we consume. Next to a zero impact from net exports, would be zero or minimal YOY changes in Net Exports, indicating stability.

95 Year US GDP Table

The below table ranks GDP and three of the four major components: Consumption, Investment, and Government. While care must be asserted when attributing responsibility to presidents for "good" or "bad" economic performance, I give this as context in hope that it becomes abundantly clear that to use such superlatives as "best" and "worst" to describe the economies during either of the past two presidents is a blatant contradiction of all facts and an insult to intelligence. If we remove Trump's worst year, the Covid recession, and Biden's best year, the Covid reflation, the remaining six years all rank in the lower half of the most recent 95 year history, while the worst year doesn't make the bottom 20. In fact, when ordered best to worst, the remaining three years of each president rank very closely to one another (49 vs 50; 60 vs 62; and 64 vs 71).

We'll study many other characteristics, but based on total GDP, the past eight years, excluding Covid, have been characterized by relatively slow and uneventful growth. There is a 40-year chart below (I used 40 years to represent roughly half of a lifetime) which shows almost indiscernible differences in growth throughout the Obama, Trump, and Biden presidencies, while 100 to 200 basis point (1 to 2 percentage points) slower growth than during the Regan, Bush-I, and Clinton administrations. For further context, the country is almost 250 years old, so it is also reasonable to assume that they are even further from "best" or "worst" if we could add the remaining 150+ years of data missing from this analysis.

If we focus on the Investment ranks, Biden has the only year that ranks in the upper half, ranked 10 places higher than Trump's best year. Both Trump and Biden have a very high increase in government spending year, ranking 71 and 73, respectively.

Whether you want to attribute responsibility to either president for the positive or negatives of GDP, neither presided over "best" or "worst" years. In fact, being mostly in the bottom half of the middle, neither had "great" nor "bad" years in our nation's history, or even recent history. By the GDP numbers, there really wasn't a material difference in economic performance between the two.

Year	President	Political Party	1:Gross domestic product	1:GDP Rank	2:Consumption Rank	7:Private Investment Rank	22:Govt Rank
2017	Trump	Republican	2.5	65	59	53	28
2018	Trump	Republican	3	49	58	50	45
2019	Trump	Republican	2.6	59	73	58	71
2020	Trump	Republican	-2.2	89	92	77	65
2021	Biden	Democratic	6.1	18	3	33	18
2022	Biden	Democratic	2.5	62	48	48	14
2023	Biden	Democratic	2.9	50	64	66	72
2024	Biden	Democratic	2.75	54	60	47	56

Year	President	Political Party	1:Gross domestic product	1:GDP Rank	2:Consumption Rank	7:Private Investment Rank	22:Govt Rank
1930	Hoover	Republican	-8.5	93	94	91	86
1931	Hoover	Republican	-6.4	92	93	92	73
1932	Hoover	Republican	-12.9	95	95	95	6
1933	Roosevelt	Democratic	-1.2	87	90	6	9
1934	Roosevelt	Democratic	10.8	5	5	3	89
1935	Roosevelt	Democratic	8.9	6	11	2	59
1936	Roosevelt	Democratic	12.9	4	2	9	90
1937	Roosevelt	Democratic	5.1	24	39	12	5
1938	Roosevelt	Democratic	-3.3	91	89	90	82
1939	Roosevelt	Democratic	8	9	18	11	85
1940	Roosevelt	Democratic	8.8	7	23	5	68
1941	Roosevelt	Democratic	17.7	2	6	14	94
1942	Roosevelt	Democratic	18.9	1	91	94	95
1943	Roosevelt	Democratic	17	3	55	93	93
1944	Roosevelt	Democratic	7.9	11	56	15	88
1945	Roosevelt-Truman	Democratic	-1	85	9	7	3
1946	Truman	Democratic	-11.6	94	1	1	1
1947	Truman	Democratic	-1.1	86	75	74	2
1948	Truman	Democratic	4.1	36	70	10	78
1949	Truman	Democratic	-0.6	83	53	89	87
1950	Truman	Democratic	8.7	8	7	4	24
1951	Truman	Democratic	8	10	79	65	92
1952	Truman	Democratic	4.1	35	46	83	91
1953	Eisenhower	Republican	4.7	27	27	51	81
1954	Eisenhower	Republican	-0.6	82	71	76	4
1955	Eisenhower	Republican	7.1	13	4	13	8
1956	Eisenhower	Republican	2.1	69	52	69	23
1957	Eisenhower	Republican	2.1	67	63	75	75
1958	Eisenhower	Republican	-0.7	84	83	82	62
1959	Eisenhower	Republican	6.9	14	16	16	54
1960	Eisenhower	Republican	2.6	60	57	62	29
1961	Kennedy	Democratic	2.6	61	72	63	77
1962	Kennedy	Democratic	6.1	17	26	21	79
1963	Kennedy-Johnson	Democratic	4.4	31	31	41	50
1964	Johnson	Democratic	5.8	19	12	38	53
1965	Johnson	Democratic	6.5	16	8	20	60
1966	Johnson	Democratic	6.6	15	15	32	84
1967	Johnson	Democratic	2.7	57	47	73	83
1968	Johnson	Democratic	4.9	25	13	49	64
1969	Nixon	Republican	3.1	48	38	52	21
1970	Nixon	Republican	0.2	76	67	79	12
1971	Nixon	Republican	3.3	46	35	28	13
1972	Nixon	Republican	5.3	23	10	25	17
1973	Nixon	Republican	5.6	20	25	27	19
1974	Nixon-Ford	Republican	-0.5	81	87	81	48
1975	Ford	Republican	-0.2	79	69	87	49
1976	Ford	Republican	5.4	22	17	17	25
1977	Carter	Democratic	4.6	29	30	18	35
1978	Carter	Democratic	5.5	21	28	23	57
1979	Carter	Democratic	3.2	47	68	56	41
1980	Carter	Democratic	-0.3	80	86	85	43
1981	Reagan	Republican	2.5	63	82	34	32
1982	Reagan	Republican	-1.8	88	80	86	40
1983	Reagan	Republican	4.6	28	14	30	69
1984	Reagan	Republican	7.2	12	21	8	66
1985	Reagan	Republican	4.2	34	22	68	80
1986	Reagan	Republican	3.5	45	32	64	76
1987	Reagan	Republican	3.5	43	43	60	58
1988	Reagan	Republican	4.2	33	29	61	34
1989	Bush	Republican	3.7	41	49	55	55
1990	Bush	Republican	1.9	71	74	72	61
1991	Bush	Republican	-0.1	78	84	80	33
1992	Bush	Republican	3.5	44	37	40	26
1993	Clinton	Democratic	2.7	56	41	37	16
1994	Clinton	Democratic	4	38	33	22	22
1995	Clinton	Democratic	2.7	55	51	57	27
1996	Clinton	Democratic	3.8	40	42	35	31
1997	Clinton	Democratic	4.4	32	36	24	38
1998	Clinton	Democratic	4.5	30	20	29	51
1999	Clinton	Democratic	4.8	26	19	36	63
2000	Clinton	Democratic	4.1	37	24	42	39
2001	Bush	Republican	1	75	65	78	70
2002	Bush	Republican	1.7	73	61	70	74
2003	Bush	Republican	2.8	53	45	54	47
2004	Bush	Republican	3.8	39	34	31	36
2005	Bush	Republican	3.5	42	40	44	30
2006	Bush	Republican	2.8	52	50	59	37
2007	Bush	Republican	2	70	66	71	42
2008	Bush	Republican	0.1	77	85	84	52
2009	Obama	Democratic	-2.6	90	88	88	67
2010	Obama	Democratic	2.7	58	76	19	20
2011	Obama	Democratic	1.6	74	78	43	7
2012	Obama	Democratic	2.3	66	81	26	11
2013	Obama	Democratic	2.1	68	77	39	10
2014	Obama	Democratic	2.5	64	54	45	15
2015	Obama	Democratic	2.9	51	44	46	44
2016	Obama	Democratic	1.8	72	62	67	46
2017	Trump	Republican	2.5	65	59	53	28
2018	Trump	Republican	3	49	58	50	45
2019	Trump	Republican	2.6	59	73	58	71
2020	Trump	Republican	-2.2	89	92	77	65
2021	Biden	Democratic	6.1	18	3	33	18
2022	Biden	Democratic	2.5	62	48	48	14
2023	Biden	Democratic	2.9	50	64	66	72
2024	Biden	Democratic	2.75	54	60	47	56

40 Year GDP Chart

95 Year GDP Chart

Sources:

• For years 1930-2023: https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categories=survey&_gl=1*2cz8zx*_ga*NTY2OTg1NDg2LjE3MjYyMzUyMDM.*_ga_J4698JNNFT*MTcyNzA5ODgxNy45LjEuMTcyNzA5OTgzMS40OS4wLjA.
  • For YOY 1930-2023 Table 1.1.1
  • Table 1.1.5
  • Table 1.1.9
• https://www.bea.gov/news/2024/gross-domestic-product-second-estimate-corporate-profits-preliminary-estimate-second