Much attention has been given to the large upward revision to second quarter U.S. gross domestic product expansion, now estimated at three point seven percent on an annualized basis. But as indicated by writer Eric Morath, an alternative measure of economic output that is also monitored by the Commerce Department, gross domestic income, advanced at a much slower pace during the second quarter.
According to that gauge, the U.S. economy expanded only zero point six percent during the second quarter after expanded by a puny zero point four percent during the first. Gross domestic income or GDI measures the same thing as gross domestic product of GDP – the size of the nation’s economy. GDP, the more commonly used measure, measures production based upon what is spent by consumers, businesses and governments.
The alternative measure, gross domestic income, measures the income generated from production – things like wages, corporate profits and taxes. Theoretically, the two measures of output should be identical. But because they emerge from separate data sources, they can differ widely from quarter to quarter. Some economists recommend placing greater weight on the gross domestic income measure, including for purposes of monetary policy.
