The economy
Gross domestic product
Also called GDP
The total value of goods and services an economy produces in a period.
How it works
GDP is the headline measure of economic size and growth. Real GDP adjusts for inflation and is the figure quoted when growth is discussed.
It is published with a lag and revised repeatedly, sometimes substantially, so the first estimate is a draft rather than a fact.
Where it misleads people
GDP growth and stock market returns are only loosely connected. Listed companies are not the economy, they earn abroad, and expectations are already in prices.
Related terms
- RecessionA significant, broad-based decline in economic activity lasting more than a few months.
- InflationThe rate at which prices rise, which means the rate at which each pound or dollar buys less.
- Economic data releaseScheduled official statistics that move markets when they differ from expectations.
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