What is Gross Domestic Product?




What is Gross Domestic Product?

Gross Domestic Product is the total market value of all finished goods and service produced in a country within a specific time period. Typically, gross domestic product is calculated on an annual basis. However, it may also be calculated quarterly. It encompasses all private and public consumption, government outlays, investments, and the foreign balance of trade. Exports are added and imports are subtracted to the value. Because of this it is used as a broad measure of domestic production and as a gauge of economic health.


Why is Gross Domestic Product valuable?

Although it is “backward-looking” it can still have a critical impact on markets if there is a large difference between actual numbers and expectations. As an indicator of economic health and growth, businesses use GDP information to inform their business strategies while government entities use it to guide policy.


What should you do?

Understanding Gross Domestic Product can be a useful tool for gauging the health of the economy. Majestic’s CORE Report follows Gross Domestic Product; along with other indicators every week to see where the market stands.

Source: Investopedia.com