| Actual | Previous | |
| Quarter over Quarter | 0.3% | 0.2% |
| Year over Year | 0.8% | 0.7% |
Highlights
The economy expanded 0.3 percent in the first quarter from the previous three-month period and 0.8 percent to the first quarter of last year. That marks the third consecutive quarter of expansion.
Exports during the period increased 2.2 percent while imports fell 0.7 percent quarter-on-quarter, indicating a positive contribution from trade.
Domestic demand as measured by final consumption spending was also a positive influence, increasing 0.4 percent quarter-on-quarter, the best result since the fourth quarter of 2024. Government spending on the other hand was flat.
Fixed capital formation was 0.7 percent higher in the first quarter, but that was the slowest increase in six quarters which was attributable to a 2.7 percent drop for investment in housing. That for machinery and weaponry was 2.3 percent higher while transportation equipment outlays were 2.0 percent higher.
While not staggering grown, the economy has so far proven to be relatively resilient in the face of ongoing challenges from the now-illegal US tariffs and the conflict in the Middle East.
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.