| Actual | Previous | |
| Quarter over Quarter | 0.3% | 0.1% |
| Year over Year | 0.8% | 0.6% |
Highlights
Economic growth ticked up in the fourth quarter, up 0.3 percent from the previous three-month period, and 0.8 percent higher than a year ago.
The year-on-year increase is the biggest since the fourth quarter of 2023 when it rose 0.9 percent, while the quarterly increase matches that of the first quarter of this year.
Preliminary data are short on specifics, but positive contributions to growth came from agriculture, forestry, and fishing along with a positive change in inventories. Net exports were a negative contribution.
While a positive result, it can hardly be said that the economy is booming. As with other European countries, consumers are still reluctant to increase spending and will continue to be a drag on growth.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. A flash estimate, providing just quarterly and annual growth rates together with some limited qualitative information on sector output, is usually available 6-7 weeks after the reference quarter.
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 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 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. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.