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The Great GDP Debate

Just like millions of Americans did last night, you probably tuned into the debate last night to see Donald Trump and Hillary Clinton duke it out one last time before the election. As entertaining as the debate was, there were some important facts discussed that were easy to miss. One of the main topics discussed was GDP (Gross Domestic Product). 

GDP, as you may remember, stands for Gross Domestic Product this is basically a number that represents a countries economic growth for a year. They use a formula shown below:

Consumer Spend+Business Spend +Countries Investments+(Exports-Imports)=GDP (Gross Domestic Product)

The GDP tells us how much a country spends, invests, and trades. The higher the GDP the better the perceived growth of the economy is to the world, so countries that export more than they import typically have a higher GDP; for example, China. 

Lets go back to the dating metaphor that we have used before with mutual funds. The amount of time you spend with your significant other can be likened to how much a country spends. The amount of time your family invests into getting to know them can be likened to how much a country invests. Finally, the amount of dates you go on can be likened to the balance of exports and imports. If you are successful, your relationship will have "good growth", like a good GDP. 

Although America has one of the highest GDPs, we also have one of the slowest growth rates. Why? Because growth is measured by two metrics: number of jobs created and number of products exported. Historically, America has had a booming economy but it has been in "recovery mode" since 2008 when the economy crashed. Combine this "recovery mode" with our massive debt and we aren't in the best shape. This is why this is such an important topic for the debate. How will each candidate's economic policy help grow our GDP and restore America to the top? Lets look at the quick facts below, from congressional budget office: 

• Trump plan is project raise the federal debt from 75% to 105% of GDP

• Clintons plan is projected to raise the federal debt from 75% to 86% of GDP 

• Trump and Clinton both claim that they will raise GDP growth but no facts have been able to prove this 

The decision is yours America, politics often like to throw around these words like GDP  but never break it down for us, we at Orca wants to help you understand these terms, that is our mantra! 

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