August saw the release of the National Income and Product Accounts for 2007. A few choice graphs for y'all this morning. First, we've got the Gross Domestic Product (GDP) graph from 2002-2007, valued at different prices.
GDP is really the sum of the price, 
, of final goods and services, 
, in a given period, times the quantity of those goods and services, 
, so if there are 
goods in the economy,
.
GDP is based on prices, which change all time, so the number is chain weighted to take account of those price changes. That's why you see two bars in the figures below from page xvi of the CSO's NIE report.
Two things should strike you reading the graph from left to right. First, just look at how rich we are. Think about how this statistic translates into tangible differences in people's living standards. It's a remarkable thing, when you consider, say, our European neighbours. Here's a graph of GDP per capita (dividing total output by the number of people in the economy to take account of different population sizes) for the OECD countries.
What do you see? You see a very rich Irish nation, compared to its peers. We know this, but it's important to be reminded.
Next up, we've got personal expenditure. Again, notice the increases over time, since the end of the Celtic Tiger period around 2002.
What is the bottom line? The national income accounts show a robust and wealthy economy, which has some overvalued assets, and is undergoing a revaluation of those assets by 2007. The wealth created in the previous years, however, doesn't go away---it's all still there, on our backs, on our roads, over our heads, in our bank accounts. We've just decided the economy's heading for another recession.
Number to watch: personal expenditure 2007 as compared to 2008. This will tell you what households are spending, how much, and what on. It'll make for some interesting reading.
