GDP
GDP (gross domestic product) is the value of all goods and services produced in a country over a period. Its growth shows whether the economy is expanding or shrinking.
How it works
GDP is usually released quarterly, often in several versions: a first estimate and later revisions. For traders the key figure is the growth rate: how much GDP changed from the previous quarter or year. The US reports quarterly growth at an annualized rate, which matters when comparing with other countries.
Strong growth usually supports a currency because the central bank is less likely to cut rates. Weak growth or contraction weighs on it. Two consecutive quarters of decline are often called a technical recession, although official definitions of recession differ between countries.
GDP comes out with a delay and describes the past, so markets often react to it less than to inflation or jobs data. Big moves happen when the number is far from the forecast.
US quarterly GDP growth is forecast at 2.0% annualized and comes in at 3.1%. The economy is stronger than expected, markets push back rate cuts and the dollar rises. Note that 0.5% growth quarter on quarter is about 2% annualized (1.005 to the fourth power ≈ 1.020).
A common mistake is comparing US annualized GDP with European quarter-on-quarter growth and concluding the US is growing four times faster. Always check which measure was published and compare it with the forecast and the previous reading, not with another country's number in a different format.
Questions and answers
What is GDP in simple terms?
It is the total value of everything a country produced over a period. Changes in GDP show whether the economy is growing.
How does GDP affect a currency?
Strong growth usually supports the currency and weak growth weighs on it. The gap between the actual number and the forecast matters most.
What is a technical recession?
It commonly means GDP falling for two quarters in a row. Official definitions of recession can differ and depend on the country.
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Updated: 2026-10-19