Economic Charts

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Friday, August 27, 2010

GDP Quarter over Quarter

The GDP numbers came out this morning show a steeper decline, in quarter over quarter growth, from the previous quarter.  Again GDP shows annualized change in the inflation-adjusted value of all goods and services produced by the economy.  It is considered a broader gauge of economic activity and provides insights into the overall health of the economy (I would consider this number in correlation to debt as well, as the debt we have been building lately has caused a lot of the growth in GDP and now the air is getting let out).  Forecast was for 1.5%, the number came in at 1.6% which beats forecast but is worse than the previous quarters number of 2.4%.
The markets are reacting positive to this lower number, as it beat forecasts by .1%.  Why would stocks pop, well some would say the forecasted number was already priced into the market and because it was better that makes stocks a bargain (I beg to differ, the number was lower showing shrinking GDP and taken with other fundamental data, this isn't great news).  Also bear in mind stimulus money that was still out there propping this up (well if we get QE2, then GDP will most likely pop back up again of course so will debt).

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