Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in)

Fundamental Analysis : What is the Difference Between GDP and Growth Rate

46 sec read

GDP (Gross Domestic Product) is the total dollar amount of all goods and services produced. The growth rate is the percentage increase or decrease of GDP from the previous measurement cycle. Even though the BEA reports quarterly, the growth rate is annualized so it can be compared to the previous year.

The GDP growth rate increases if retail expenditures, government spending, and exports increase. The growth rate will decline with increases in exports, inventory, and declines in consumer, business or government spending.

The GDP growth rate is the most important indicator of economic health. If GDP is growing, so will business, jobs and personal income. If GDP is slowing down, then businesses will hold off investing in new purchases and hiring new employees, waiting to see if the economy will improve. This, in turn, can easily further depress GDP and consumers have less money to spend on purchases. If the GDP growth rate actually turns negative, then the U.S. economy is heading towards a recession.

Because so many things are measured in GDP, the BEA often revises the GDP growth rate within a month after releasing it. This can impact the stock market as investors get this new information about the state of the economy’s health.

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Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in)

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3 Replies to “Fundamental Analysis : What is the Difference Between GDP…”

  1. Dear Rajandran

    Regarding your article : Fundamental Analysis : What is the Difference Between GDP and Growth Rate

    Can you please check the 2nd paragraph :
    “The growth rate will decline with increases in exports, inventory”
    I do not understand the reason why the growth rate will decline with increase in exports ?
    Appreciate if you can help to explain on this sentence.

  2. It should be “The growth rate will decline with increases in imports,inventory and declines in consumer, business or government spending.

  3. It should be “The growth rate will decline with increases in imports,inventory and declines in consumer, business or government spending.

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