What are the four components of GDP?

The four components of gross domestic product are personal consumption, business investment, government spending, and net exports. These four components tell you what a country is good at producing and how robust its overall economy is. Annual GDP is the country's total economic output throughout the year.

How do economists use GDP?

Economists can use GDP to determine whether an economy is growing or experiencing a recession. Investors can use GDP to make investment decisions—a bad economy often means lower earnings and stock prices. GDP measures the monetary value of goods and services produced within a country's borders in a given time, usually a quarter or a year.

How do you calculate the components of GDP?

The formula to calculate the components of GDP is Y = C + I + G + NX. In other words, GDP is the sum of consumption (C), investment (I), government spending (G), and net exports (NX), which are imports minus exports. In 2023, U.S. GDP was 68% personal consumption, 18% business investment, 17% government spending, and negative 3% net exports.