GROSS DOMESTIC PRODUCT
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Why is this important?
The Gross Domestic Product (GDP) is a measure of the extent of economic activity within a defined geographical region or within a sector of a defined economic region. When referencing a defined metropolitan area it is sometimes referred to as the Gross Metropolitan Product (GMP). Essentially the GDP/GMP measures the economic output of a region and can be used to compare overall economic activities across regions, or the contributions of various sectors.
How are we doing?
In 2007, the total private sector GDP for Long Island was about $115 billion, up from about $113 billion in 2006. Overall, Long Island’s economy has grown by 34% from 1997 to 2007 (33% if the public sector is included). Growth has averaged about 3% per year. However, there was greater growth earlier in the period and slower growth more recently. Growth in GDP from 2004 to 2007 has averaged about 1.6%, slightly less than half the rate between 1997 and 2004 (3.6%) and lower than the US average for the same time period (3.2%).
What does “2004 Dollars” Mean?
The purchasing power of a dollar changes over time. If the items we buy generally cost more today than they did ten years ago, then one dollar today is worth less than a single dollar was back then. Therefore, it is necessary to adjust for that in order to create a common scale when we compare dollar values (e.g., when comparing wages) over several years. By picking a single year as the standard (say, 2004), dollars from earlier years can be “inflated” using the Consumer Price Index in order to estimate what those earlier dollars would be able to buy in 2004. Similarly, dollars from later years can be “deflated” to what their purchasing power would have been in 2004. By converting all values to the same scale it is much easier to detect the presence or absence of any trends over time (e.g., are wages actually rising, falling or remaining the same?).