December 11, 2023

A blog post from BEA Director Vipin Arora

Mackinac Bridge—which connects the Upper and Lower parts of Michigan—is a marvel. So much so that I find it difficult, if not impossible, to appreciate the scale and grandeur of the bridge from just one vantage point. Driving on it, for example, offers a different experience than looking at it from nearby St. Ignace. And the view is awe inspiring from the water. We are looking at the same bridge from each vantage point, yet each gives us a different perspective.

Strange as it might seem, this has a parallel when measuring domestic economic activity. BEA uses three different—and, in principle, equivalent—statistics to estimate the value of final goods and services produced in the United States. Just as each vantage point of Mackinac Bridge offers a different perspective on the bridge, each of these statistics offers a different perspective on economic activity.

Our featured statistic is gross domestic product (GDP)—also known as the expenditure measure of GDP—and it reflects the demand for U.S.-produced final goods and services. GDP estimates present economic activity from the vantage point of consumers, investors, governments, and foreigners.

Gross value added (GVA)—also known as the production measure of GDP—reflects the supply of production from U.S. industries. GVA estimates present economic activity from the vantage point of producers such as manufacturers, wholesalers, and others.

The third way to measure the value of final goods and services is gross domestic income (GDI)—also known as the income measure of GDP—which reflects the income generated from production. GDI estimates present economic activity from the vantage point of workers, business owners, and others (such as governments and nonprofits) that participate in production.

This year's comprehensive update of the national, industry, and regional accounts, released starting in September, marked the end of a 20-plus-year journey to "harmonize" our statistics. One enormous benefit of this harmonization is that GDP, GDI, and GVA are all available at the same time with the third estimate of GDP, including with our annual and comprehensive updates. This is a historic achievement for economic measurement in our country.

Or, to go back to where I started, we can now simultaneously get perspectives on U.S. economic activity from three different vantage points that, as a collective whole, offer a deep and rich understanding on the performance of our economy.