How to Calculate the Annual Growth Rate for Real GDP
Original post by C. Taylor of Demand Media
The Gross Domestic Product (GDP) for a country is a total market value of all domestically produced goods and services. The GDP growth rate indicates the current growth trend of the economy. When calculating GDP growth rates, the U.S. Bureau of Economic Analysis uses real GDP, which equalizes the actual figures to filter out the effects of inflation. Using real GDP allows you to compare previous years without inflation affecting the results.
Look up the real GDP for two consecutive years. These figures are found on the U.S. Department of Commerce Bureau of Economic Analysis' website.
Subtract the first year's real GDP from the second year's GDP. As an example, the real GDP in the U.S. for 2009 and 2010 were $12.7 trillion and $13.1 trillion, respectively. Subtracting the 2009 figure from the 2010 figure results in a difference of $384.9 billion.
Divide this difference by the first year's read GDP. In the example, you would divide $354.9 billion by $12.7 trillion, which gives you an annual growth rate of 0.030, or 3 percent.
- U.S. Department of Commerce: Current-Dollar and "Real" GDP
- U.S. Department of Commerce: Percent Change from Preceding Period
- The Money Alert: Real GDP Vs. Nominal GDP
- U.S. Department of Commerce: National Income and Product Accounts
About the Author
C. Taylor has been a professional writer since 2009. He has written for online publications and the "Journal of Asian Martial Arts." Taylor specializes in martial arts, traveling, sciences and computer repair. He received a Master of Science in wildlife biology from Clemson University and a Bachelor of Arts in biological sciences from the College of Charleston.