Economic Indicator: GDP – Gross Domestic Product

Definition: gross domestic product (gdp)

What’s GDP?

Gross domestic product (GDP) is the value or price of all goods and services produced by the U.S. economy. It includes all exports minus imports, domestic private and government investment and all consumption spending. It is measured and reported by governments and countries quarterly. The Bureau of Economic Analysis reports U.S. quarterly GDP figures here: https://www.bea.gov. Kahn Academy describes the calculation of GDP in this video:

Why is GDP so important to capital markets and economists?

GDP is the single determining calculation of the health of a given economy. When it is retracting, an economy is having a recession, but when it expands, an economy is booming. Wikipedia reports and ranks countries based on gross domestic product data as well: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal). According to this list, the United States ranks #1 in GDP, the European Union ranks #2 and China ranks #3 as of 3rd quarter 2016: