GDP

The most important indicator of the state of the economy is the value of the goods and services it produces. This is known as the gross domestic product, or GDP. The GDP figure is published quarterly.

A stable GDP is generally regarded as good news for investors. Rising GDP during a recession is a sign of economic growth. However, rising GDP in an already strong economy will trigger fears of inflation. Inflation is bad news for investors as it eats away at returns. This explains why share prices often fall when it is reported that the GDP has increased.