National Spending Approach

The national spending approach, also known as the expenditure approach, takes all the goods and services that go into GDP and splits them into consumption, investment, and government purchases. It also adjusts for net exports, which is equal to exports minus imports.

What’s the point of splitting GDP up like this? Well, when GDP falls, we want to know why. The factors behind consumption, investment, and government purchases are all very different – as are the tools we might use to boost them.