Real GDP
Gross domestic product adjusted for inflation, measuring the actual volume of goods and services produced.
What is Real GDP?
Real GDP measures the total value of goods and services produced in an economy during a specific period, adjusted for changes in the price level using a base-year price index. Unlike nominal GDP, which can rise simply because prices increased, real GDP rises only when the actual volume of output grows. Economists and policymakers use real GDP to compare economic performance across time periods and countries on an apples-to-apples basis. The Bureau of Economic Analysis publishes quarterly US real GDP figures using the GDP deflator to strip out inflation effects.
Example
In 2022, US nominal GDP grew approximately 9.1%, but real GDP grew only about 2.1%. The large gap reflected elevated inflation running near 8%. Had analysts relied on nominal GDP alone, they would have overstated how much the economy actually expanded in terms of goods and services produced.