Gross output

In economics, gross output (GO) is the measure of total economic activity in the production of new goods and services in an accounting period. It is a much broader measure of the economy than gross domestic product (GDP), which is limited mainly to final output (finished goods and services). As of first-quarter 2019, the Bureau of Economic Analysis estimated gross output in the United States to be $37.2 trillion, compared to$21.1 trillion for GDP. GO is defined by the Bureau of Economic Analysis (BEA) as "a measure of an industry's sales or receipts, which can include sales to final users in the economy (GDP) or sales to other industries (intermediate inputs). Gross output can also be measured as the sum of an industry's value added and intermediate inputs." It is equal to the value of net output or GDP (also known as gross value added) plus intermediate consumption. Gross output represents, roughly speaking, the total value of sales by producing enterprises (their turnover) in an accounting period (e.g. a quarter or a year), before subtracting the value of intermediate goods used up in production. Starting in April 2014, the BEA began publishing gross output and gross output-by-industry on a quarterly basis, along with GDP. Economists regard GO and GDP as complementary aggregate measures of the economy. Many analysts view GO as a more comprehensive way to analyze the economy and the business cycle. "Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts." In his work, The Purchasing Power of Money: Its Determination and Relation to Credit, Interest, and Crises (1911, 1920), Yale professor Irving Fisher introduced a theoretical measure of "volume of trade" with his equation of exchange: MV = PT, where PT measured the "volume of trade" in the economy at a specified time. In 1931, Friedrich A. Hayek, the Austrian economist at the London School of Economics, created a diagram known as Hayek's triangles as a theoretical measure of the stages of production.