Gross Domestic Product, pre- and post-pandemic

Gross Domestic Product, pre- and post-pandemic

Recent economic performance as measured by Gross Domestic Product, before and after the pandemic.

Perhaps the most important measure of an economy is its growth in Gross Domestic Product, or GDP.⁽¹⁾“GDP is one of the most comprehensive and closely watched economic statistics: It is used by the White House and Congress to prepare the Federal budget, by the Federal Reserve to formulate monetary policy, by Wall Street as an indicator of economic activity, and by the business community to prepare forecasts of economic performance that provide the basis for production, investment, and employment planning. … while GDP is the featured measure of the economy’s output, it is only one summary measure. The answers to the follow-up questions are found by looking at other measures found in the NIPAs; these include personal income, corporate profits, and government spending.” Measuring the Economy, Bureau of Economic Analysis. https://www.bea.gov/sites/default/files/methodologies/nipa_primer.pdf In fact, the most commonly-accepted indication of an economy in recession is declining GDP.

In the United States, the Bureau of Economic Analysis( BEA), a division of the United States Department of Commerce measures GDP. In brief, BEA says gross domestic product, or value added, is the value of the goods and services produced by the nation’s economy. ⁽²⁾Gross domestic product (GDP), or value added, is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production. GDP is also equal to the sum of personal consumption expenditures, gross private domestic investment, net exports of goods and services, and government consumption expenditures and gross investment. BEA publishes quarterly GDP data and calculates real GDP to reflect the added value after adjusting for changes in price levels caused by inflation. Additionally, BEA makes seasonal adjustments and presents the figures at an annual rate.

Ex-president Trump claims that the economy was the best it had ever been during his term and that it has declined under President Biden. Analyzing recent economic records is challenging due to the Covid pandemic. The pandemic response led to a steep drop in GDP, easily visible in the adjacent chart. To account for the pandemic’s impact — though it may not be fully possible — I divided the analysis into two periods: pre-pandemic, and from the recovery to pre-pandemic levels of GDP.

In the nearby chart, the interval from point A to B is the Trump administration from its start to the pandemic. From points C to D is an interval starting when real GDP returned (roughly) to its pre-pandemic level to the most recent data, which is the quarter starting on July 1, 2024. (Click on illustrations for larger versions.)

From the nearby table, real GDP during the pre-pandemic Trump administration (points A to B), grew at an average of $144.3 billion per quarter, or 0.74%.

For the Biden administration from pandemic recovery to present (points C to D), real GDP grew at an average of $166.6 billion per quarter, or 0.79%.

The dollar value of average quarterly GDP increase is higher for the Biden administration. More importantly, the proportional rate is also higher, compared to the pre-pandemic Trump administration.