GDP (Gross Domestic Product)
The sum of the value of all goods and services a country produces over a period — the largest indicator of the economy's size and growth pace.
In plain terms
GDP adds up the value of all goods and services a country produced over a period. It expresses that country's "total economic size" as one number.
Usually you look at "how fast it grew (the growth rate)" rather than the size. Positive GDP growth means the economy is expanding; negative, shrinking. Two consecutive quarters of negative growth is commonly seen as a "recession."
What it tells you
GDP is the biggest picture of the whole economy's health. When the economy grows, company results, employment, and consumption generally improve together.
The market reacts to "versus expectations" and "the trend" more than GDP itself. Whether growth is starting to bend or accelerating sways the mood.
Formula
GDP = the sum of the market value of goods and services a country produces over a period (usually a quarter or year) GDP growth = the rise versus the prior quarter/year (the economic growth rate)
What high or low means
Solid GDP growth is positive for the economy, but in a hot-price phase it can be read as "too-strong growth → rate burden." Like other indicators, it is read two ways by phase.
Slowing growth while prices stay high (stagflation worry) is a combination the market is especially wary of.
GDP is a lagging indicator tallying an "already past" quarter. By release the economy may have moved to the next phase, so it has limits for seeing the future.
GDP is revised several times after the first release. Look at the revisions and trend rather than overreacting to the first number.
GDP is a macro indicator. This term is background for understanding market news. (※ Our screen handles individual companies' SEC-filed financials.)
The phrase "two consecutive quarters of negative real GDP is a recession" is widely used. In 2022 the US did see real GDP shrink in Q1 and Q2 in a row (about −1.6% and −0.6% annualized). By this "two-quarter rule" it should already have been a recession.
But the body that officially calls US recessions is the National Bureau of Economic Research (NBER), a private academic institution, and it judges recession not by "two quarters of GDP" but by whether employment, real income, industrial production, and consumption shrank broadly and persistently over several months or more. In 2022, jobs grew by hundreds of thousands each month and the unemployment rate sat near a record-low 3.5% range — meaning the economy had not cooled that much. So NBER ultimately did not declare that period a recession.
This shows that trusting only a simple formula like "one line of GDP," let alone the "two-quarter rule," can read the economy backwards. Even with GDP printing negative, if employment and consumption are holding up in the same period, the story is different. So to gauge the economy, you have to set GDP alongside the employment and consumption indicators for the picture to add up.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see GDP and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.