1
$\begingroup$

Wikipedia defines GDP as:

Measure of the market value of all final goods and services produced in a period (quarterly or yearly) of time.

So, I take it that the total value of all goods (and services, whatever "Services" means) manufactured within the country per year is the country's GDP. This YouTube video does a nice job of explaining it too:

What is Gross Domestic Product (GDP)?

The United States GDP, also from Wikipedia, is around $19 trillion!

According to the definition, US should manufacture USD 19 trillion worth of goods (finished products) and services within the US, but again, according to this Wikipedia article, US manufacturing industry outputs only about $2.2 trillion worth of goods.

So, what accounts for the remaining $17 trillion? Is it the "Services"? If so, what are these services and how are they measured?

Improve this question
$\endgroup$
2
  • 2
    $\begingroup$ Have you tried Wikipedia or a search engine? The keyword that may help is "sector". Sectors can be categorized in many ways, but a common categorization includes: a) primary resources, b) manufacturing, c) services, d) public sector. A declining role of manufacturing in the economy is often understood to be indicative of an increasingly advanced economy, in part because it reflects the rest of the economy growing faster. $\endgroup$
    – nathanwww
    Commented Jun 28, 2018 at 22:32
  • $\begingroup$ Most of the US economy is consumer spending, and most of that in services. $\endgroup$
    – aris
    Commented Dec 24, 2021 at 5:10

2 Answers 2

Reset to default
4
$\begingroup$

Looking at gross output (which includes using the outputs of other industries) and value-added (largely wages and profits) by industry you get numbers like this for 2017 in USD trillion.

Adding up the value-added gives total GDP, and you can see that there is a lot more to the economy than manufacturing

                                                         Gross output  Value-added
Agriculture, forestry, fishing, and hunting                       0.4  0.2
Mining                                                            0.5  0.3
Utilities                                                         0.4  0.3
Construction                                                      1.5  0.8
Manufacturing                                                     6.0  2.2
Wholesale trade                                                   1.7  1.2
Retail trade                                                      1.8  1.1
Transportation and warehousing                                    1.1  0.6
Information                                                       1.7  0.9
Finance, insurance, real estate, rental, and leasing              6.2  4.1  
Professional and business services                                3.8  2.4
Educational services, health care, and social assistance          2.8  1.6 
Arts, entertainment, recreation, accommodation, and food services 1.4  0.8
Other services, except government                                 0.7  0.4
Government                                                        3.7  2.5

Total                                                            33.7 19.4
Improve this answer
$\endgroup$
0
$\begingroup$

This webpage by the Bureau of Economic Analysis breaks down GDP by industry: link to BEA webpage.

Note that in addition to manufacturing, there are also tangible outputs created by agricultural and extraction (mining and energy) industries. Furthermore, even for manufactured goods, not 100% of the final retail price is assigned to manufacturing. When breaking down GDP by industry, value-added contributions are allocated to wholesale and retail industries.

Generally speaking, GDP is measured by taking the market value of transactions, but there are other components that have an imputed value. One would need to read a full description of the national income and product accounts (NIPA) to get the full details. The BEA produces a lot of documentation on that front, I cannot hope to summarise it.

Improve this answer
$\endgroup$
2
  • $\begingroup$ Probably you meant something like this ... but GDP counts only transactions which are alternatively a) final outputs or b) consumption, not the sum of transactions which would include intermediate goods and services (inputs). $\endgroup$
    – nathanwww
    Commented Jun 28, 2018 at 23:06
  • $\begingroup$ When looking at GDP by industry, value-added is imputed to intermediate sectors (wholesale trade, transportation, warehousing). That is what I was referring to. The point is that the final consumption value is greater than what would be imputed to the manufacturer. $\endgroup$
    – Brian Romanchuk
    Commented Jun 29, 2018 at 17:25

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.