Intermediate consumption in the context of "National accounts"

Consumption refers to the use of resources to fulfill present needs and desires. It is seen in contrast to investing, which is spending for acquisition of future income. Consumption is a major concept in economics and is also studied in many other social sciences.

Different schools of economists define consumption differently. According to mainstream economists, only the final purchase of newly produced goods and services by individuals for immediate use constitutes consumption, while other types of expenditure — in particular, fixed investment, intermediate consumption, and government spending — are placed in separate categories (see consumer choice). Other economists define consumption much more broadly, as the aggregate of all economic activity that does not entail the design, production and marketing of goods and services (e.g., the selection, adoption, use, disposal and recycling of goods and services).

In economics, gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector of an economy. "The gross value added is the value of output minus the value of intermediate consumption; it is a measure of the contribution to GDP made by an individual producer, industry or sector; gross value added is the source from which the primary incomes of the System of National Accounts (SNA) are generated and is therefore carried forward into the primary distribution of income account."

Value added is a term in economics for calculating the difference between market value of a product or service, and the sum value of its constituents. It is relatively expressed by the supply-demand curve for specific units of sale. Value added is distinguished from the accounting term added value which measures only the financial profits earned upon transformational processes for specific items of sale that are available on the market.

In business, total value added is calculated by tabulating the unit value added (measured by summing unit profit — the difference between sale price and production cost, unit depreciation cost, and unit labor cost) per each unit sold. Thus, total value added is equivalent to revenue minus intermediate consumption. Value added is a higher portion of revenue for integrated companies (e.g. manufacturing companies) and a lower portion of revenue for less integrated companies (e.g. retail companies); total value added is very nearly approximated by compensation of employees, which represents a return to labor, plus earnings before taxes, representative of a return to capital.

In economics, gross output (GO) is a measure of the value of production of new goods and services during an accounting period. Gross output represents the total value of sales by producing enterprises (their gross revenue or turnover) in an accounting period (a quarter or a year), before subtracting the value of intermediate goods used up in production from the value of sales. Gross output can also be defined as the value of net output (the gross value-added or GDP) plus the value of intermediate consumption.

Gross output is therefore a broader measure of the value of production than gross domestic product (GDP), which measures only the net value of final output (finished goods and services). As of third-quarter 2024, for example, the Bureau of Economic Analysis estimated gross output in the United States to be $50.9 trillion, compared to $29.3 trillion for GDP.