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Fundamentals

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Gross Domestice Product (GDP) - Mar 27

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27 March 2008 @ 04:13 am EST

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Previous : 0.6%

Forecast : 0.6%

Definition :

The total market value of all goods and services produced within the political boundaries of an economy during a given period of time, usually one year. This is the government's official measure of how much output our economy produces. It's tabulated and reported by the National Income and Product Accounts maintained by the Bureau of Economic Analysis, which is part of the U. S. Department of Commerce. Gross domestic product is one of several measures reported regularly (every three months) by the pointy-headed folks at the Bureau of Economic Analysis.

Why is it useful?
The GDP is considered a very important indicator that moves the currency markets hectically for the value of such a reading. The reading is merely a reflection of a certain economy's performance in a specified period of time; therefore any improvement reflects the wellbeing of the economy in all its considered aspects. Consequently, a revitalized economy is reflected positively on the currency providing strength and demand on that currency.

The GDP reflects the markets' cycle that is starting by the consumer with increased income and high confidence in the economy would likely rise the level of spending therefore production levels increase more employment resulting in the availability for more cash to spend empowering the cycle of production, which in result ends by empowering the currency.

The effect as mentioned is positive on the currency and direct; as for the equity markets the effect is towards the upside as well for the unbreakable tie that links any economy to the equity market, if there is growth there is defiantly an increase in the equity as well for it is a reflection of the output of that economy. Therefore any increase in the GDP affects positively the currency as well as the equity market and the opposite of this is as well applicable.

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