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Mid-Year Planning: Tax Changes to Factor In
Investing to Save Time Boosts Happiness Returns
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What is the employment situation report, and why is it important to investors?
What is gross domestic product, and why is it important to investors?


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What is gross domestic product, and why is it important to investors?

GDP, or gross domestic product, measures the value of goods and services produced by a nation's economy less the value of goods and services used in production. In essence, GDP is a broad measure of the nation's overall economic activity and serves as a gauge of the country's economic health. Countries with the largest GDP are the United States, China, Japan, Germany, and the United Kingdom.

GDP generally provides economic information on a quarterly basis and is calculated for most of the world's countries, allowing for comparisons among various economies. Important information that can be gleaned from GDP includes:

  • A measure of the prices paid for goods and services purchased by, or on behalf of, consumers (personal consumption expenditures), including durable goods (such as cars and appliances), nondurable goods (food and clothing), and services (transportation, education, and banking)
  • Personal (pre-tax) and disposable (after-tax) income and personal savings
  • Residential (purchases of private housing) and nonresidential investment (purchases of both nonresidential structures and business equipment and software, as well as changes in inventories)
  • Net exports (the sum of exports less imports)
  • Government spending on goods and services

GDP can offer valuable information to investors, including whether the economy is expanding or contracting, trends in consumer spending, the status of residential and business investing, and whether prices for goods and services are rising or falling. A strong economy is usually good for corporations and their profits, which may boost stock prices. Increasing prices for goods and services may indicate advancing inflation, which can impact bond prices and yields. In short, GDP provides a snapshot of the strength of the economy over a specific period and can play a role when making financial decisions. All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.

 
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 Michael D. Krost is a Registered Representative of and offers securities products & services through Royal Alliance Associates, Inc. Member FINRA/SIPC, a registered broker-dealer. In this regard, this communication is strictly intended for individuals residing in the states of AL; GA; IN; TN; PA; OR; OK; OH; NY; NM; NJ; NE; WA; VA; TX; NC; MO; MD; MI; MA; LA; KY; KS; IL; FL; AZ; CA; DE; CO; AR. No offers may be made or accepted from any resident outside the specific state(s) referenced.

Michael D. Krost Individual is also separately registered as an investment adviser representative under MDK Financial Group, Inc., a registered investment advisor, not affiliated with Royal Alliance Associates, offering advisory services in the state(s) of AL; GA; IN; TN; PA; OR; OK; OH; NY; NM; NJ; NE; WA; VA; TX; NC; MO; MD; MI; MA; LA; KY; KS; IL; FL; AZ; CA; DE; CO; AR in which the RIA is registered. As such, these services are strictly intended for individuals residing in state(s) where MDK Financial Group.


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For information concerning the licensing status or disciplinary history of broker-dealer, investment adviser, BD agent, or IA rep, a consumer should contact his or her state securities law administrator.


"PLEASE NOTE: The link(s) that is being provided is strictly a courtesy. When you link to any of the websites provided here, you are leaving this website and assume total responsibility and risk for your use of the website you are linking to. We make no representation as to the completeness or accuracy of any information provided at these websites."
 


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