If you throw all the products we buy and the services we use in one basket, then add up the price tag, that's the Gross Domestic Product, which is the primary metric economists use to assess the economic health of a country or region.

The easy part of calculating GDP is the calculation itself: C+I+G+(X-M)=GDP. Got it? No? Well, add Consumption, Investment by companies, Government purchases, and then take the product of eXports (calling it 'E' would lack sexiness) minus iMports ('I' was taken). Viola! GDP.

Still don't get it? Well, knowing the components helps. Consumption is the biggest component, and it's a tally of the cost of all the goods and services we buy. Investment is what companies spend on the real assets they own, plus the value of the inventory that we haven't gobbled up through consumption. Government purchases are what the Feds pay money for (whether it be highways or fighter jets, though big social programs, like welfare, aren't counted). And then we calculate the difference between the goods and services we¿re sending to other countries and the stuff we're bringing in.

Good. That explains it, except there's a catch. Inflation has a habit of distorting the numbers, so economists talk about either Nominal GDP or Real GDP. In fact, Real GDP isn't necessarily "real" for most folks, since it takes any inflation out. Nominal GDP includes the effects of inflation. (There's something called the implicit price deflator which is a calculation using the two, but we'll spare you the details.)

So, now that we know GDP, why do we want to? Well, it's good to compare different markets. And watching the trend shows whether a given economy is growing (good), stagnating (not so good), or shrinking (very not so good). When GDP goes down two quarters in a row, we're officially in a recession.

For the record, GDP is released at the end of each month, with most reporting ¿preliminary¿ data for the previous month. But you won't get final GDP numbers for the fourth quarter of a year until the very end of the first quarter of the next year. After all, it's not an easy number to calculate.

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Saturday, August 09, 2008

2008 Toyota Prius -- Try To Find One

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Ron Amadon

MarketWatch

DAMASCUS, MD -- This is a car that sips gas, so everyone wants one.

"You can't find one" on a dealer's lot now, one Prius owner told me at the gas pumps. He beamed like a proud father when we asked about his car and quickly informed us how much it cost him to fill up. Fortunately, we were not testing a big SUV that day.

According to some late reports, would-be buyers may have to wait six months or so for their Prius to come off the truck. To deal with the demand Toyota will retool a plant in Tupelo, Mississippi to produce the little hybrid when the building is ready to go in 2010. It would be the first Prius made in this country - all the current stock comes from a dedicated plant in Japan.

By the way, here's another sign of changing times -- that plant in Mississippi was being designed to produce the Highlander sport utility.

With all this going on, we thought it was high time to renew acquaintances with the hybrid. (See slide show.)

Let's get right down to the facts that matter. We got 42 miles a gallon with our test car, well above the average we got in our last test (carried out in the dead of a very cold winter).

This time the temperature was in the upper 80's and low 90's, yet we stayed nice and cool inside even when the Prius was stopped. That was not always the case in some hybrids.

In case you have forgotten, both an electric motor and a 4-cylinder gas engine power the Prius. Zero to 60 will come up somewhere north of 10 seconds, but we thought it felt faster.

The electric motor can propel the car by itself at slow speeds, as the engine shuts down at stop signs and red lights. It will quickly fire up when needed, but there was an occasional minor shutter.

It is comfortable enough out on the highway, but we think the car would benefit from a telescoping steering wheel in addition to one that tilts.

We also hope that the next generation of Prius, due out this fall, gets instruments that are located right in front of the driver, like 99% of all the other cars in the world. Early word is that it will be available with a solar panel that will power the air conditioning.

For the large portion of our city, suburban, and back road driving, the Prius was relatively quiet and refined.

Power, handling, and all around sports car behavior are not even issues here. However, you will find the car to be a delight in town and city driving, where, of course, it delivers its best gas mileage. But we thought the graph in the center of the dash that constantly tells you where the power is coming from, and how much gas you are saving was distracting, to put it mildly.

There was ample room front and rear, and the 60/40 split folding rear seat can create more than decent cargo room. In keeping with virtually all Toyota products, the assembly quality was top of the line.

It is easy to see why so many people want to get their hands on a Prius. While one can debate forever whether a hybrid makes sense or not, one cannot debate the fact that the Prius sips gas, is good on emissions, and will allow the owner to save green and feel green.

Our nicely-optioned car went out the door for a reasonable $24,410 including vehicle stability control (vital), backup camera, and MP3/WMA playback capability, among other goodies.

The downside? It is harder to find a new Prius for sale than to find someone who could really sing in the new Mama Mia movie.

Vehicles tested in this column are on loan from the auto companies through local distributors.

Comments? ramadon@marketwatch.com.