<p>US GDP is gross output that US produces in some given time period. I am guessing the search result showed you GDP for a year.</p>
<p>Stock is an asset and thus counts as wealth. There is no reason why value of assets or wealth in the economy should be equal to the  yearly output of the economy.</p>
<p>Let me give you a down to earth analogy. GDP is like your income. If you earn 50k per year gross that would be roughly equivalent of your GDP. However, you could buy with your yearly income 10k worth of stocks each year as your savings and build some wealth that way. In 10 years you would accumulate 100k worth of stock, which would be double your income. There would be nothing crazy or suspicious about you having 100k worth of wealth even though your yearly income is 50K.</p>

CC BY-SA 4.0
2022-04-21T20:30:12.393Z
thanks this is clear. So GDP doesn't reflect the wealth of a country, it a measure of its annual income. How would one measure the wealth of the country in dollar value? is that even possible?! if US adds money into circulation it doesn't mean it's more wealthy right?
Armen Babakanian
CC BY-SA 4.0
2022-04-21T20:43:46.870Z
@ArmenB yes macroeconomically output and income are the same thing. One way of calculating GDP is adding all incomes in the economy. You can measure wealth of a country by summing value of all assets country has, all business, houses and valuables
1muflon1
CC BY-SA 4.0
2022-04-21T21:08:38.483Z
so let's say I have 5 people living in US, and they all have combined assets, cash, etc of 100K. and china has the same allocation and number of people. If US prints an extra 100K and starting circulating that into the economy, the wealth doesn't change correct? unless that extra 100K is in the hands of the people. But does that make US richer than China?
Armen Babakanian
CC BY-SA 4.0
2022-04-21T21:13:12.747Z
@ArmenB well nominal wealth could change, real wealth would not. In economics we distinguish between real variables (real income real GDP real wealth) and nominal variables (nominal GDP, nominal income etc) trivially nominal income could be increased by just printing more money, however real value of income is different matter
1muflon1
CC BY-SA 4.0
2022-04-21T21:17:45.060Z
thanks! this is clearer however I can't say I understand how would one measure real wealth. If I have a strong military but you have all the oil in the world, I can still invade your country or pressure you in ways you cannot sell your oil so it's hard for me to wrap my head around the concept of wealth on a macro level.
Armen Babakanian
CC BY-SA 4.0
2022-04-21T21:19:52.237Z
@ArmenB real wealth is just wealth adjusted for price changes. Again wealth in economics is market value of assets country owns. So you take that market value of asset let’s say your house and then you adjust them for changes to price level.
1muflon1
CC BY-SA 4.0
2022-04-22T10:41:28.447Z
that’s simply not true. If value of dollar is unstable you can measure it in constant dollars thereby removing any effects from change in dollar value. There is no reason to get kilograms etc involved
1muflon1
CC BY-SA 4.0
2022-04-22T11:00:17.507Z
what do you mean not trust they are constant? They are mathematically constructed to be constant, that’s like saying you don’t trust 4/2=2. As long as you have enough trust to accept Zermelo-Frankel axioms that are used to derive numbers like 1, 2, 3 and operators like + - : x, there is no additional trust required.
1muflon1
CC BY-SA 4.0
2022-04-21T19:45:34.787Z
2022-04-21T19:45:34.787Z
1muflon1
<p>I googled US GDP and it shows $20.9 Trillion.</p>
<p>Then I googled S&amp;P 500 market cap and it shows $42.4 Trillion.</p>
<p>Can someone explain to me like I am a 5 year old what is going on?</p>

<gdp><stock-market>
US GDP vs S&P 500 market cap
Armen Babakanian
# US GDP vs S&P 500 market cap

(Asked by: username_0 on 2022-04-21)

I googled US GDP and it shows $20.9 Trillion.

Then I googled S&P 500 market cap and it shows $42.4 Trillion.

Can someone explain to me like I am a 5 year old what is going on?

**Tags:** gdp, stock-market


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## 1 answers

### Answer by username_1 on 2022-04-21. Score: 1 | Accepted answer

US GDP is gross output that US produces in some given time period. I am guessing the search result showed you GDP for a year.

Stock is an asset and thus counts as wealth. There is no reason why value of assets or wealth in the economy should be equal to the yearly output of the economy.

Let me give you a down to earth analogy. GDP is like your income. If you earn 50k per year gross that would be roughly equivalent of your GDP. However, you could buy with your yearly income 10k worth of stocks each year as your savings and build some wealth that way. In 10 years you would accumulate 100k worth of stock, which would be double your income. There would be nothing crazy or suspicious about you having 100k worth of wealth even though your yearly income is 50K.

> **Comments:**
> **username_0**: thanks this is clear. So GDP doesn't reflect the wealth of a country, it a measure of its annual income. How would one measure the wealth of the country in dollar value? is that even possible?! if US adds money into circulation it doesn't mean it's more wealthy right?  
> **username_1**: @ArmenB yes macroeconomically output and income are the same thing. One way of calculating GDP is adding all incomes in the economy. You can measure wealth of a country by summing value of all assets country has, all business, houses and valuables  
> **username_0**: so let's say I have 5 people living in US, and they all have combined assets, cash, etc of 100K. and china has the same allocation and number of people. If US prints an extra 100K and starting circulating that into the economy, the wealth doesn't change correct? unless that extra 100K is in the hands of the people. But does that make US richer than China?  
> **username_1**: @ArmenB well nominal wealth could change, real wealth would not. In economics we distinguish between real variables (real income real GDP real wealth) and nominal variables (nominal GDP, nominal income etc) trivially nominal income could be increased by just printing more money, however real value of income is different matter  
> **username_0**: thanks! this is clearer however I can't say I understand how would one measure real wealth. If I have a strong military but you have all the oil in the world, I can still invade your country or pressure you in ways you cannot sell your oil so it's hard for me to wrap my head around the concept of wealth on a macro level.  
> **username_1**: @ArmenB real wealth is just wealth adjusted for price changes. Again wealth in economics is market value of assets country owns. So you take that market value of asset let’s say your house and then you adjust them for changes to price level.  
> **username_1**: that’s simply not true. If value of dollar is unstable you can measure it in constant dollars thereby removing any effects from change in dollar value. There is no reason to get kilograms etc involved  
> **username_1**: what do you mean not trust they are constant? They are mathematically constructed to be constant, that’s like saying you don’t trust 4/2=2. As long as you have enough trust to accept Zermelo-Frankel axioms that are used to derive numbers like 1, 2, 3 and operators like + - : x, there is no additional trust required.  

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