Gross Domestic Product (GDP) quantifies total value of all goods and services produced within a nation’s borders. Therefore, it serves as a measure of economic activity. GDP can be computed using three approaches: production, income, and expenditure. Importantly, real GDP adjusts for inflation, providing a true growth picture. Governments, businesses, and economists utilize GDP to understand trends. Hence, it aids in making informed decisions.
GDP Final 3Q 2024
In the third quarter of 2024, the U.S. economy grew by 3.1%, up from 3.0% in the previous quarter. This estimate is based on more complete data than earlier ones. The growth was mainly due to increased consumer spending, exports, investments in business infrastructure, and federal government spending. However, higher imports slightly reduced the positive impact on the economy.
Source: www.bea.gov
The total value of goods and services produced in the country (current dollar GDP) increased by 5.0%, reaching $29.37 trillion. Prices of goods and services rose by 1.9%, while personal consumption prices (excluding food and energy) went up by 2.2%.
Personal income increased by $191.7 billion, and disposable income (after taxes) grew by $141.5 billion, which is a 2.7% rise. The personal saving rate stayed steady at 4.3%.
For businesses, the income from production rose by 2.1%, though corporate profits fell by $15.0 billion. Overall, the revisions show that exports and consumer spending contributed significantly to the economic growth, despite some declines in other areas.
In the third quarter of 2024, the U.S. GDP deflator increased by 1.9%, reaching a record high of 125.5 points. This is compared to a 2.5% increase in the previous quarter.
Effects of Q3 GDP on the Stock Market
The stronger-than-expected GDP growth boosted investor confidence, leading to a rise in stock prices as it indicated a healthy and expanding economy. Also, higher GDP growth often translates to increased corporate earnings, as businesses benefit from higher consumer spending and economic activityThe major indices rise after GDP data released from a strong support.
