Nominal value usually means a money amount measured at current prices, without adjusting for changes in the general price level. In securities, nominal can also refer to a stated amount such as par or face value.
Those are different uses of the term. A nominal wage is the amount paid in money. A real wage adjusts for changes in prices to help assess purchasing power. Neither meaning says that the nominal figure is imaginary or an estimated market price.
Nominal versus real amounts
Nominal figures show money values in the period concerned. Real figures remove the effect of price changes using a suitable index. The US Bureau of Economic Analysis distinguishes current-dollar and real estimates in its GDP methodology.
For a simple series with a price index set to 100 in the base period: real value = nominal value ÷ price index × 100. The Dallas Fed explains this deflation calculation.
The price measure must fit the question. A consumer price index can help assess household purchasing power. The GDP price deflator measures prices associated with domestic output, so consumer inflation should not simply be substituted when calculating real GDP.
An exact real-growth example
Suppose a hypothetical economy produces annual nominal GDP of $100 billion in Year 1 and $110 billion in Year 2. Nominal growth is 10%. Suppose its GDP price deflator rises from 100 to 105 over the same period.
Year 2 GDP at Year 1 prices is $110 billion ÷ 1.05, or about $104.76 billion. Real growth is therefore approximately 4.76%.
The exact relationship is real growth = (1 + nominal growth) ÷ (1 + price growth) − 1, using decimal rates. Subtracting 5% from 10% gives a useful approximation of 5%, but not the exact answer. Official real GDP estimates use more detailed price and quantity methods.
Why nominal amounts still matter
Nominal figures describe actual money revenues, wages, debts and budgets. Real figures help compare purchasing power or output across periods. For example, a 3% pay rise with a 5% rise in the relevant price index means a real change of 1.03 ÷ 1.05 − 1, about minus 1.90%.
Money illusion describes focusing on money amounts while overlooking changes in purchasing power. It does not make nominal data useless. Both measures can be needed to understand the same event.
Nominal value of securities
In ordinary bond terminology, nominal or face value often means the stated principal. A $1,000-face-value bond can be issued or traded for a different price. Share par value is likewise different from the issue price or stock market price. Preferred shares need not have a fixed maturity.
Technical debt statistics can use a more precise definition. The BIS defines nominal value as the amount owed, including accrued interest. It can change through repayments, accruals or contractual adjustments and need not equal a fixed face amount.
Nor is every security’s principal fixed. US Treasury Inflation-Protected Securities adjust principal for inflation and deflation under their terms. The instrument’s documentation and the statistical definition determine which amount is being discussed.
Last checked and updated on November 10, 2026 by the MBN editorial team.