Everything You Need to Know About Today's GDP Report

Today I want to talk about what may be the most important three-letter acronym when it comes to the U.S. economic recovery: GDP, which stands for Gross Domestic Product.

GDP is the broadest measure of a nation’s economic activity—adding up the total value of all goods and services produced in the U.S. This influential status update on the U.S. economy takes into account net exports, government spending, consumption, investment and inventory. Of course, out of these, the most important component is consumption, which accounts for about two-thirds of GDP.

The latest report is the second estimate for first-quarter GDP—which measures the U.S. economy’s progress over the third first. Because this is such an important report, the Commerce Department officially revises each quarter’s GDP estimates a total of four times: three during the quarter (advance, preliminary and final), as well as a final time once a year in July when the annual benchmark revisions are announced.

And what had the newswires buzzing this morning is that the U.S. economy grew at an annual rate of 1.2% in the first quarter. Originally, first-quarter Gross Domestic Product (GDP) was thought to have climbed 0.7%. The real improvement came consumer spending, which rose 0.6% rather than the previous estimate of 0.3%.

If you’ve kept up with this blog, you know that Fed Chair Janet Yellen is a labor economist, and she watches the labor market very carefully.

So more news like this could tip the balance towards an interest rate hike in June. As a result, I’m going to be watching next Friday’s payroll report very carefully. I’ll post an update on the blog at that time; in the meantime, have a wonderful Memorial Day weekend.

Sincerely,

Louis Navellier

Louis Navellier

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