Economic Slowdown Confirmed by Gross Output and B2B Data

Paul Dykewicz

[Gross Domestic Expenditures chart]

The U.S. economy is slowing but thus far is avoiding a recession, according to the latest data from the Bureau of Economic Analysis.


Gross Output, a broadened measure of U.S. economic activity published by the bureau, grew “much more slowly” in the fourth quarter of 2014 than the previous quarter or the same one a year ago, said Mark Skousen, PhD, a proponent of the new statistic and the editor of the Forecasts & Strategies investment newsletter.
Real Gross Output (GO) advanced at an annualized rate of only 2.6% to $31.4 trillion by the end of 2014, half the rate of the 5.2% jump in the third quarter of 2014.

GO is a measure of sales or receipts of all industries throughout the production process, including business-to-business transactions (B2B). As a result, GO provides a fuller perspective of the performance of the broad U.S. economy, in contrast to Gross Domestic Product (GDP), which omits most B2B growth.



Since the financial crisis of 2008-09, GO has risen faster than GDP. The trend continued the fourth quarter of 2014, with GO rising at a slightly faster rate than GDP.

Indeed, GDP, which only measures the value of final goods and services, climbed 2.2% in real terms to $17.7 trillion in the fourth quarter of 2014, compared to 2.5% for GO during the same quarter. GO’s superior growth compared to GDP indicates that an economic recovery remains in place and a recession is unlikely, Skousen explained.

However, B2B activity definitely slowed in early 2015. According to the new Skousen B2B Index, business spending increased at a lower annualized rate of 2.5% in fourth-quarter 2014, compared to third-quarter 2014, as the following chart shows.


“The GO data and my own B2B Index demonstrate that total U.S. economic activity has slowed significantly, but not enough to cause an actual recession,” said Skousen, a presidential fellow at Chapman University in Orange, California. “B2B spending is, in fact, a pretty good indicator of where the economy is headed, since it measures spending in the entire supply chain.”

GO is a more comprehensive measure of economic activity than GDP, which leaves out a “big part of the economy,” especially business-to-business transactions in the production of intermediate inputs, Skousen explained.

“GO includes most B2B activity that is vital to the production process,” Skousen said.

Skousen introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990, new third edition scheduled for July 2015). The Bureau of Economic Analysis publishes GO on a quarterly basis in its “GDP by Industry” data. It is the first aggregate statistic to be published on a quarterly basis since GDP was introduced in the 1940s.

“Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and demonstrates that business spending is more significant than consumer spending,” Skousen explained. “By using GO data, we see that consumer spending is actually less than 40% of economic activity, not the 70% figure that is [commonly] reported by the media.”
The Skousen B2B Index showed total business spending throughout the production process reached $23.0 trillion in the fourth quarter 2014, compared to personal consumption expenditures of $12.1 trillion.


“Thus, we see that business spending is almost twice the size of consumer spending in the U.S. economy,” Skousen said.

The Wall Street Journal and Forbes magazine are among the media organizations that have highlighted Skousen’s economic views about GO and his other favored economic statistics.

Media interest in GO, the Skousen B2B Index and their relationship to GDP have grown to the point that Skousen said he hired a part-time media relations person, Valerie Durham, 1-410-570-0535 and, to field queries for him. He also can be reached directly at

Paul Dykewicz is the editorial director of Eagle Financial Publications, editor of Eagle Daily Investor, a columnist for Townhall and Townhall Finance, a commentator and the author of a new inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain.” Paul has written for a number of prominent organizations, including the Wall Street Journal, Dow Jones and USA Today. Follow Paul on Twitter @PaulDykewicz.


share on:

Like This Article?
Now Get a FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader

Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle


DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops