Courtesy of Doug Short.
Note from dshort: The charts in this commentary have been updated to include the Q3 GDP Third Update.
The chart below is my way to visualize real GDP change since 2007. I’ve used a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself.
My data source for this chart is the Excel file accompanying the BEA’s latest GDP news release (see the links in the right column). Specifically, I used Table 2: Contributions to Percent Change in Real Gross Domestic Product.
Over the time frame of this chart, the Personal Consumption Expenditures (PCE) component has shown the most consistent correlation with real GDP itself. When PCE has been positive, GDP has been positive, and vice versa. The contribution of PCE came at 1.24 of the 1.82 real GDP. However, this is a downward revision of the 1.63 PCE contribution to the 2.0 second estimate of GDP, which was a downward revision from the 1.72 PCE contribution to the 2.5 GDP Advance Estimate.
For a long-term view of the role of personal consumption in GDP and how it has increased over time, here is a snapshot of the PCE-to-GDP ratio since the inception of quarterly GDP in 1947.
I’ll update these charts when the Preliminary Estimate of Q4 2011 GDP is released in late January.
