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How to visualize 14.5 trillion dollars in Federal Debt

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GDP Charts from Advisorperspectives.com

by Jennifer Nash, 1/27/23

This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.

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Note: The charts in this commentary have been updated to include the Q4 2022 advance estimate.

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The chart below is a way to visualize real GDP change since 2007 and uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics:

Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the fourth quarter of 2022 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.

Note: The conventional practice is to round GDP to one decimal place, the latest at 2.6%.

Here is a chart of the latest estimates.

Over the time frame of this chart, the personal consumption expenditures (PCE) component has shown the most consistent correlation with real GDP. When PCE has been positive, GDP has usually been positive, and vice versa. In the latest GDP data, the contribution of PCE came in at 1.49 of the 2.9 real GDP, down from the previous quarter.

Gross private domestic investment was a positive contributor.

Net exports were positive in Q4.

Government consumption expenditures also came in as a positive contributor.

As for the role of PCE in GDP and how it has increased over time, here is a snapshot of the PCE-to-GDP ratio since the inception of quarterly GDP data in 1947. To one decimal place, the latest ratio of 70.6% is just below its record high.

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Let's close with a look at the inverse behavior of three of the GPDI components during recessions. PCE and especially GC generally increase as a percent of GDP whereas GPDI declines. Note the three with different vertical axes (PCE on the left, gross private domestic investment and government consumption on the right) to highlight the frequent inverse correlations.

 

Q2 2014 GDP

U.S. GDP Grew 4.6% In Second Quarter 2014, Up From Earlier Estimates

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On Friday, the Bureau of Economic Analysis released its third estimate of real gross domestic product for the second quarter of 2014 — covering April, May and June of this year. The release showed output in the U.S. increasing at an annual rate of 4.6%. This is relative to the first quarter when real GDP declined a sharp 2.1%.
The revision is up from BEA’s 4.2% second estimate released last month as well as its 4% advance estimate out in July. The revision, BEA said in a release, was largely due to a larger than previously estimated increase in nonresidential fixed investment and exports. Of the revision the BEA wrote, “The general picture of economic growth remains the same” as when it released the second estimate.
The 4.6% growth in real GDP reflected growing personal consumption, private inventory investment, exports, both residential and nonresidential fixed investment, as well as local government spending. The gains were partially offset by an increase in imports, which negatively impact GDP, and a 0.9% decline in federal government expenditures.
“Given the partial indicators in between the second and third estimate this was broadly anticipated but that doesn’t dull the good news,” Jeremy Lawson chief economist at Standard Life Investments. He also noted that consensus was for the upward revision to be driven by growth in personal consumption but the real driver was fixed business investments with 9.7% growth. This, Lawson says, is a strong sign for future growth and critical for productivity. At the same time the 2.5% personal consumption growth was slightly lower than anticipated but “not a disappointment.”
The price index for gross domestic purchases — which measures prices paid by U.S. residents — increased 2%, up slightly from the prior estimate and compared to 1.4% growth in the first quarter. Real personal consumption expenditures increased 2.5%, keeping with the second estimate and up from the 1.2% increase in the first quarter.
The BEA now estimates second quarter corporate profits increased $164.1 billion, compared to a $201.7 billion decrease in the first quarter. Taxes on corporate income increased $45.7 billion in the second quarter, compared with an increase of $66.9 billion in the first.
The S&P 500, Dow Jones Industrial Average and Nasdaq Composite were all in the green following the pre-market release pushing higher upward momentum seen earlier in the day.
BEA — a division of the Department of Commerce – will release its advance estimate of Q3 GDP estimate on Thursday, October 30.