2016 in Review: Economy and Jobs
Kelvey Vander Hart, Fiscal Policy Contributor
As the year comes to a close, it is time to look back on the state of America’s economy this year. Gross domestic product, gross national product, exports, job creation, and unemployment are all important factors to take a look at. We will take each one by one.
Gross Domestic Product
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. The GDP gives a very broad measurement of national economic activity. Although the year has not come to a close, we have reports from the Bureau of Economic Analysis detailing the first three quarters.
The graph above from the BEA gives an an overview of the GDP in the past four years. Real GDP (read about the difference between nominal GDP and real GDP here) for the third quarter of 2016 was up 3.2 percent. In the past four years, this falls fourth in highest raises in percentage, with the fourth quarter of 2013, and the second quarter of 2014, both tying at around 4 percent, and the third quarter of 2014 coming in at 5 percent.
The beautiful thing about the GDP measurement is that it is universal. All countries use this same measurement, and therefore, the measurement is consistent across economies. This makes it incredibly easy to compare and contrast the economic activity of various countries.
Gross National Product
The difference between GDP and Gross National Product (GNP) is that while the GDP measures levels of production by any person or entity within the country, the American GNP measures the production of any American or American entity, no matter where it takes place in the world. For example, GNP would include an American corporation that outsourced production to China. Therefore, the GNP is used less frequently and measures a broader scope than the GDP.
he graph by Trading Economics above shows the increase in GNP over the past two years. From the beginning of the year to the end of the third quarter of 2016, the GNP went from 16668.4 billion to 16897.4 billion. This is a 229 billion dollar increase over three quarters.
Similar to GDP, GNP is used across the planet. Having a universal standard of economic measurement allows for country-to-country comparison. This is truly valuable for economic policy and foreign policy direction.
According to Investopedia, an export is ‘a function of international trade whereby goods produced in one country are shipped to another country for future sale or trade’.
This graph from Trading Economics shows the rise and fall of United States’ exports over the year, ending in October.
This graph from Trading Economics shows the rise and fall of exports over a greater period of time.
Job Creation and Unemployment Rates
According to Bureau of Labor statistics reports, the average new non-farm job creation throughout the months of September, October, and November 2016 was 176,000 month-to-month. September, new job creation was 208,000; October, new job creation was 142,000; November, new job creation was 178,000.
The following graph, also from the Bureau of Labor, shows the total changes in employment throughout various industries.
The unemployment rate reached the lowest point since 2007 in November 2016 at 4.9 percent. The number of people unemployed fell 387 thousand, reaching 7.4 million. This graph from Trading Economics shows unemployment over the last 10 years.
The economy has had its highs and lows throughout 2016. Throughout Obama’s time as President of the United States, there have been some good things. Job creation and unemployment rate reduction, for starters. These things have been good, but not great. On top of that, the economy has not grown tremendously throughout the past eight years.
American economy and job growth will be a fascinating thing to observe under President-elect Trump. He and President Obama have almost completely different priorities, and it will be fascinating to watch them play out. As we end 2016, let us look forward to 2017 and economic changes under a new administration.
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