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Gross output is an economic concept used in national accounts such as the United Nations System of National Accounts (UNSNA) and the US National Income and Product Accounts (NIPA). It is equal to the value of net output or GDP (also known as gross value added) plus intermediate consumption.

Gross output represents, roughly speaking, the total value of sales by producing enterprises (their turnover) in an accounting period (e.g. a quarter or a year), before subtracting the value of intermediate goods used up in production. This description is not quite accurate though, among other things because flows and imputations relating to government services and households are also included.

To obtain a measure of gross value added or Net output, the value of intermediate goods and services must be subtracted from gross output. Net value added is obtained by additionally subtracting consumption of fixed capital (depreciation).

Definition of production[link]

The statistical definition of gross output is dependent upon the definition of production applied. Typically some economic flows and activities are excluded from coverage in calculating the value of gross output, on the ground that they are unrelated to production in the domestic economy. These include certain foreign transactions, property income, transfers, land sales, and various government disbursements, unpaid housework and voluntary work. On the other hand, items are included which some economists would regard as spurious, such as the imputed rental value of owner-occupied housing (this is the average rents, at market rates, which owners of residential housing would receive if they rented out the housing they occupy).

Presentations in UNSNA accounts and US national accounts[link]

In the UNSNA standard "product account", gross output is the largest aggregate, and it is shown how GDP is derived from it, via subtracting intermediate consumption. However, in the American NIPA system, no annual totals for gross output and intermediate consumption are shown in the product account, the focus being on GDP and its components only - gross output and intermediate consumption are cited only in the input-output tables compiled for intermittent years. Thus, to find annual data for gross output and intermediate consumption of the United States, one needs to refer to UNSNA data sets.

Gross output versus net output[link]

Gross and net output are frequently confused with each other in economic discourse, insofar as the net output of a particular industry or economic sector is assumed to refer to the total sale value of its products produced during an accounting interval. This is however not the case, because the net output of a sector refers only to the value-added by that sector, equal to the factor income it generates. The total value of its output is in reality its gross output, which includes the value of materials and operating costs used to produce the output. It is only the net output of the whole economy (equal to GDP) which provides a measure of the total value of all new goods and services produced together. If, say, a car factory produces a car, the value of the car includes both labour costs, tax imposts and gross profit (its value-added, which is its contribution to GDP), but also the value of materials and services used up to make the car, which are inputs purchased from other sectors (or imported) that are used up in production. Since the inputs of one industry are the outputs of another, goods and services used up in production have to be subtracted from the grand total of output sales in the whole economy in order to obtain a grand total for the net output value in the whole economy. But at the level of an individual sector, the total value of the goods and services it produced in an accounting interval is not the net output, but the gross output.

Sector transactions[link]

Typically national accounts are sectorized, i.e. separate accounts are compiled for distinct industry output sectors such as manufacturing, agriculture, and different services; economic sectors such as market and non-market sectors; and institutional sectors such as the public sector, the private sector and households. Thus it is usually possible to obtain measures of the gross output for different sectors of the economy.

The transactions between different sectors who purchase inputs and sell outputs to each other are analyzed by national statistical offices using an input-output model. The input-output matrix tables which are calculated every few years by statistical offices provide a means to assess the effect which the growth or decline of particular sectors has on other sectors of the economy, which either buy its products or supply goods and services to them. They show, for each sector, the value of the inputs it purchases from other sectors, and the value of purchases of its gross output by other sectors. Sectoral output is the value sold by an industry to other industries; it excludes that output sold within the industry itself.

See also[link]

• GDP
• Intermediate consumption
• Net output
• United Nations System of National Accounts (UNSNA)
• National accounts
• Input-output table
• GNP

References[link]

This article concerns the PIMCO bond manager; for the business-startup manager, see Bill Gross (entrepreneur)

Bill Gross
Born	(1944-04-13) April 13, 1944 (age 68) Middletown, Ohio
Nationality	American
Alma mater	UCLA (M.B.A.) Duke University
Known for	Co-founder of PIMCO
Net worth	$2.2 billion (2011)[1]

William Hunt "Bill" Gross (born April 13, 1944) is an American financial manager and investment author who co-founded Pacific Investment Management (PIMCO). Gross also runs PIMCO's $252.2 billion Total Return Fund.

Early life and career[link]

Gross was born in Middletown, Ohio, the son of Shirley, a homemaker, and Sewell M. Gross, a sales manager for AK Steel Holding.^[2][3] He was raised a Presbyterian.^[4] His family moved to San Francisco in 1954.^[3] Gross graduated from Duke University in 1966 with a degree in psychology.^[5] At Duke he joined Phi Kappa Psi.^[6] He then served in the Navy and earned an MBA from the UCLA Anderson School of Management in 1971. Gross briefly played blackjack professionally in Las Vegas, Nevada, and has said that he applies many of his gambling methods for spreading risk and calculating odds to his investment decisions. He is also a CFA Charterholder, earning his credentials while working as an investment analyst for Pacific Mutual Life between 1971 and 1976.^[7]

Gross manages one of the world's largest mutual funds, focusing mostly on bonds. Called "the nation's most prominent bond investor" by the New York Times,^[8] he co-founded Pacific Investment Management (PIMCO) and currently manages PIMCO's Total Return fund (the world's largest bond fund and fifth largest mutual fund) and several smaller ones.^[9]

In the 1990s he authored two popular-market books on investing, Bill Gross on Investing and Everything You've Heard About Investing is Wrong. In September 2008, by holding large positions in agency backed mortgage bonds of Fannie Mae and Freddie Mac, Gross's funds netted U.S. $1.7 billion after the Federal takeover of Fannie Mae and Freddie Mac^[10] for which he had lobbied^{[citation needed]}.

According to Forbes, in 2011, he is the 564th richest person in the world, with a net worth of $2.1 billion.^[11]

Personal life[link]

Gross is Married to Sue J. Gross. They have two children together.^[12]

Gross is also a prominent stamp collector.^[13] As of November 2005, he became the third person (after Robert Zoellner in the 1990s and Benjamin K Miller pre-1925)^[14] to form a complete collection of 19th century United States postage stamps. In October 2005, he purchased at auction for $2.97 million a unique plate block of the famous 1918 24-cent U.S. airmail stamps known as the "Inverted Jenny," featuring an engraving of a Curtiss JN-4 biplane printed upside-down. He then traded the Inverted Jenny Plateblock to Donald Sundman, President of Mystic Stamp Company, a stamp dealer, for a 1-cent 1868 "Z Grill" depicting Benjamin Franklin, thus completing Gross's 19th century collection.^[15]

In 2009, Gross bought a house on Harbor Island in Newport Beach, CA for $23 million and then tore it down.^[16]

In July 2011, Gross purchased the former home of actress Jennifer Aniston for a reported $42 million.

Philanthropy[link]

In 2005, Gross donated $23.5 million to Duke University, $20 million of which was set aside for financial aid.^[17]

In 2006, Gross donated to Médecins Sans Frontières the 9.1 million U.S. dollars^[18] that he earned from the auction at Shreves Philatelic Galleries of his British philatelic collections.^[19] His Scandinavian and Finnish collections were sold by Spink auction house in May 2008 to make a donation to the Millennium Villages Project.^[20]

Bibliography[link]

• Bill Gross (1997). Everything You've Heard About Investing Is Wrong!. Crown Business. ISBN 0-8129-2839-3. 
• Bill Gross (1998). Bill Gross on Investing. Wiley. ISBN 0-471-28325-8. 

References[link]

External links[link]

• Speech inducting Bill Gross into the Fixed Income Analysts Society Hall of Fame
• New York Times article on Gross's stamp collecting
• The Bill Gross' Way of Making Money (Market Thoughts)
• The William Gross Stamp Collection
• Gross auction at Shreves Philatelic Galleries
• Bill Gross interviewed by American business news journalist Consuelo Mack