| Consensus | Consensus Range | Actual | Previous | |
| Quarter over Quarter | 0.5% | 0.2% to 0.8% | 0.3% | 0.8% |
| Year over Year | 2.6% | 2.5% to 2.6% | 2.5% | 2.6% |
Highlights
Growth slowed more than expected to 0.3 percent on quarter in Q1 and 2.5 percent on year. Expectations called for 0.5 percent on quarter and 2.6 percent on year.
Market Consensus Before Announcement
The consensus sees growth slowing to 0.5 percent on quarter in Q1 from 0.8 percent in Q4. Growth expected unchanged at 2.6 percent on year.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy and is usually released early in the third month after the reference period.
Description
GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. 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. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. 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.
Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.
Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower.