Why Is GDP Important?
Why is GDP important? The GDP or gross domestic product is a main indicator used to measure the well being of a country’s economy. It is a representation of the total dollar value of all goods and services that were created over a specified time period. The current GDP is shown as a comparison to previous years or quarters. The GDP for the United States according to the Bureau of Economic Analysis from March of 2017 is $18,698.4 billion dollars. At this value the GDP of the US economy is at a slow start for 2017, growing only 0.7% since January of 2017. The current Q1 US. GDP report shows that the United States economy grew at the slowest pace this year than it has in the three previous ones.
Investors can use the GDP report as a predictor to how an economy is performing. Wall Street doesn’t seem to be too concerned about the current report. There are big expectations for growth rebounds in this current quarter. Numbers in the first quarters of GDP reports have been less than strong in years past because of other factors. President Donald Trump has promised faster growth for the economy, but only time will tell if his promises will turn into revenue for the economy.
The financial markets and bond markets didn’t change much in response to the low GDP figures. Since the investment component in the report was decently strong, the markets didn’t react strongly to the lack of consumer growth. There were some signs of exhaustion during trading on Friday as global stocks retreated. Global markets are wary with new warnings of major conflicts between the United States and North Korea. There is some uncertainty in the market at this time with investors erring on the side of caution by removing riskier assets. Tax reform uncertainty has also caused some upheaval in the market.
Even if the economy is showing slow growth during the first GDP report the economy is in good shape overall. Unemployment figures have fallen to a low 4.5%, gas prices are on the low end while wages growth is on the rise. While the high confidence about the economy’s growth in 2017 hasn’t been translated into actual growth as of yet there is a lot of optimism about economic growth and future GDP reports. There are many experts that are holding out hope that consumer spending will reach the level of confidence over the next few months.