The economy ran out of steam at the end of last year. Real GDP was only unchanged on the quarter, its worst performance since the first quarter of 2021 and a couple of ticks short of the market consensus. As a result, annual growth eased from 0.9 percent to 0.7 percent while the excess of total output versus and its pre-Covid level held steady at 3.1 percent.

However, despite the relatively soft headline rate, domestic final demand rose a solid 0.5 percent on the back of a 1.7 percent bounce in investment in equipment. Household consumption was up 0.3 percent as was government consumption but construction fell 0.5 percent. Consequently, GDP would have been stronger but for business inventories which subtracted 0.5 percentage points.

Net foreign trade also had a negative impact, subtracting 2.0 percentage points as export volumes fell 1.6 percent and imports only 0.3 percent. This followed a hefty 4.6 percentage point boost in the third quarter.

In terms of output, growth came mainly from accommodation and food (1.5 percent), trade (0.4 percent), health and social activities (0.8 percent). Manufacturing (minus 0.3 percent) contracted for a third successive quarter.

Today's update suggests that higher SNB interest rates are beginning to have a cooling effect on economic activity. However, further tightening still looks very probable next month with the central bank determined to get (and keep) inflation (3.3 percent in January) back below 2 percent. Today's updates put the Swiss ECDI at 7 and the ECDI-P at minus 20, the relative buoyancy of the former attributable to surprisingly firm prices that mask unexpected weakness in the real economy data.

Fourth-quarter GDP is expected to rise a quarterly 0.2 percent versus 0.2 and 0.1 percent growth in the two prior quarters.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There is no flash estimate and the first report is typically not issued until around sixty days after the end of the reference quarter. This has the advantage of limiting the size of any future revision and also accommodates the inclusion of the GDP expenditure components.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.

The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.