How does the government measure GDP?

The Bureau of Economic Analysis — a division of the Commerce Department — releases GDP data on a quarterly basis using data from the Census Bureau and the Bureau of Labor Statistics.

GDP is measured quarter-by-quarter, but new estimates come out every month. Adding up all the economic output in the United States is hard, so the BEA releases regular revisions of its GDP estimates as more accurate information becomes available. So, for example, the BEA released its first estimate of GDP growth in the fourth quarter of 2013 in January 2014. Then in February it released the second estimate, and in March came the third estimate. Then the three-estimate process started over in April, with measures of growth for the first quarter of 2014. There are also annual revisions, which generally cover the three previous years’ worth of data.

News accounts generally focus on the GDP growth rate, rather than the level of GDP. Or, more precisely, the seasonally adjusted annual real GDP growth rate.

In the United States, GDP is annualized to better show how it changed over time. The idea of annualizing a quarter’s GDP is to ask what it would look like if the economy had a full year of growth like it had a particular quarter.

GDP, its major components, and closely related statistics that are made out of those components are collectively called National Income and Product Accounts (NIPAs). The NIPAs are in fact a relatively recent invention. Economist Simon Kuznets first introduced the Senate to his method of accounting for national income in 1934, and gross national product (a close cousin of GDP) was first introduced to the US in 1942.