GDP
Leading up until today there has been quite a buzz regarding the US Gross Domestic Product (GDP). Today the reports are out and although our GDP shrank less than expected the news is still bleak.
The U.S. economy shrank the most since 1982 in the fourth quarter as consumer spending recorded the worst slide in the postwar era, a trajectory that’s likely to continue in coming months. The 3.8 percent annual pace of contraction in the final three months of last year was less than forecast, with a buildup of unsold goods cushioning the blow. (Read More…)
GDP is an often used acronym so I also wanted to use this post to uncover some of the mystery.
- The simplest definition is – The total cost of all goods and services produced over a period of time for a specific geography (country, region, etc).
- When GDP goes down it means that a country is creating and providing less goods and services than it previously was. This is the current case and if you are creating and providing less goods it means that consumers are buying less, companies are producing less and jobs are being cut.
- When GDP goes up it means that more goods and services were created and provided than previously. Hopefully we’ll see this come 3rd or 4th quarter of this year which will mean consumers will be buying more, companies will be producing more and there will be more jobs.
GDP is a good number to get the overall pulse of an economy over-time. Over the past 8 years we have seen incredible GDP numbers, thus the reason a negative dip will certainly have impacts. To really know whats happening you’ll have to dig into the numbers (this should give you a glimpse of how complex this can be).
