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Peter R. Bain
How To Make A Full-Time Income Trading Less Than Part Time
Big Dogs Exposed
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Newsletter: GDP
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The Gross Domestic Product (GDP)
The U.S. GDP is the largest of any country in the world. As such, it has a tremendous impact on markets, such as bonds and stocks.
The Gross Domestic Product (GDP), the bellwether economic report, measures the production, distribution, and consumption of goods and services, the end result being the total dollar amount (market values) of all final goods and services produced in the U.S. during a given period. The GDP does not take into account unsold goods or shelf inventory. It is a powerful indication of just how well the economy is doing – or not. The report is issued by the Commerce Department quarterly for the previous quarter, and it is revised monthly.
‘Final goods and services’ refers to the fact that only final sales to consumers in the U.S. through retailers, not factory orders, are included in the GDP.
‘Gross’ refers to the fact that there is no distinction made between products sold to new customers and products sold to customers who are simply replacing goods that have depreciated or are worn out.
GDP comes in two different flavors … ‘nominal’ GDP and ‘real’ GDP. Nominal GDP is not adjusted for inflation; real GDP is. To convert nominal GDP to real GDP, divide it by the GDP deflator, which is a measure of inflation – i.e., the changes in prices of materials needed to produce goods and services.
To derive GDP per capita, divide either nominal or real GDP for a given year by the population in that year.
Factors other than fundamental shifts in the economy, such as seasonal factors, can influence GDP figures up or down. That is why GDP figures are estimated before their official release and the reason for later revisions.
Some other factors affecting GDP include its makeup: manufacturing represents more than 20 percent of the number, exporting goods and services about 12 percent and farming just a little over two percent.(Source: Optionetics)
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