Gross domestic product (GDP)
gross domestic product · GDP
Gross domestic product (GDP) is the total value of all goods and services newly produced within a country over a period, the main measure of an economy's size and growth.
In plain terms
GDP is an economy's report card: consumer spending plus business investment plus government spending plus exports minus imports. When the news talks about "growth," it usually means the change in real GDP, adjusted for inflation.
Watch how it is reported. The US publishes quarterly growth as an annualized rate, as if that pace lasted a whole year, while many other countries report the plain change from the previous quarter. A US "2%" can be roughly the same pace as another country's "0.5%."
Why it matters
Strong growth usually means rising profits and jobs; weak or negative growth raises recession fears. Central banks weigh growth alongside inflation when setting rates.
How it connects to markets
- Stronger than expected: better earnings prospects, but fewer expected rate cuts, so yields and the dollar tend to rise
- Weaker than expected: more expected cuts, lower yields, pressure on cyclical sectors such as industrials and materials
- GDP looks back at the previous quarter, so markets often react less than to timelier data such as PMIs