What it is
Gross Domestic Product (GDP) is the broadest measure of a nation's economic activity and health. It represents the sum of consumer spending, business investment, government spending, and net exports (exports minus imports). GDP is typically calculated on an annual or quarterly basis and indicates whether an economy is expanding or contracting. A rising GDP usually signifies economic growth, while a sustained decline suggests a recession.
The Bureau of Economic Analysis (BEA) releases GDP data quarterly, with advance, second, and third estimates. Policymakers, including the Federal Reserve, use GDP growth rates to assess the overall performance of the economy and to guide monetary policy decisions. Investors track GDP to understand the broader economic environment, which influences corporate earnings, employment, and market sentiment. Nominal GDP includes inflation, while real GDP adjusts for it.
Why it matters
GDP is the primary indicator of a country's economic health, signaling growth or contraction. It impacts corporate profits, employment, and market trends.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice