Home › Glossary

What is GDP (gross domestic product)?

In one line: GDP, or gross domestic product, is the total value of all goods and services a country produces over a set period, usually a quarter.

Trading glossary · Updated 2026-10-21

A simple example

GDP adds up everything an economy makes and sells: cars, haircuts, software, new homes. Markets care less about the total and more about how fast it's growing.

In the US, the Bureau of Economic Analysis (BEA) reports GDP every quarter, at 8:30 am ET. The growth number is shown as an "annualized" rate: what the year would look like if that quarter's pace kept up.

Here's the math. Say GDP grew 0.5% from one quarter to the next.

• Annualized: about 0.5% × 4 = about 2% (the exact method compounds, so it's a touch higher).

So a headline of "GDP grew 2%" usually means one quarter grew about half a percent.

Why it matters

GDP is the broadest check on the economy's health.

• Strong growth can mean more spending and hiring. It can also push Inflation up, which may keep interest rates higher.
• Weak or negative growth can point toward a Recession, and toward rate cuts.

Markets react to the gap between the actual number and what was forecast. Our GDP report guide walks through actual vs forecast vs previous.

A common mistake

Treating the first GDP number as final. The first release, the "advance estimate," comes about a month after the quarter ends. It's revised twice more as better data arrives. A number can change by a lot.

Questions