What is the difference between GDP and GDI charts?

GDP and GDI are both measures of a nation's economic output, but they use different data sources and calculation methods.

In theory, GDP and GDI should be equal, as they are measuring the same economic activity.

However, in practice, they often differ due to the "statistical discrepancy."

The statistical discrepancy between GDP and GDI is typically small, usually less than 1% of GDP.

But it can widen during economic downturns or periods of rapid growth.

GDI may be a better indicator of economic activity, especially during recessions, as it measures the incomes earned and costs incurred in production, which can provide a more comprehensive picture.

The Federal Reserve Bank of St.

Louis publishes a "Real Average of GDP and GDI" chart, which shows the average of the two measures over time, providing a more robust assessment of the economy.

According to the U.S.

Bureau of Economic Analysis (BEA), the percent change in real GDI can sometimes diverge from the percent change in real GDP, especially during periods of economic transition.

GDI data is subject to revisions and updates, just like GDP data, and these revisions can affect the relationship between the two measures.

Economists often use both GDP and GDI data to get a more complete understanding of the economy, as they can provide complementary information.

The relative importance of GDP versus GDI can depend on the specific economic question or analysis being undertaken.

Some researchers have found that GDI may be a better predictor of future economic growth than GDP, as it captures information about the distribution of income.

The statistical discrepancy between GDP and GDI can be influenced by factors such as changes in inventory valuation, the treatment of taxes, and the measurement of income from self-employment.

Analyzing the trend and relationship between GDP and GDI over time can provide insights into the overall health and stability of an economy.