TRUMP WIN: 2nd quarter economic growth doubles pace of 1st quarter

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The economy picked up the pace in the second quarter, growing at more than double the pace recorded earlier this year as a result of increased consumer spending, rising exports, and a drastic increase in business spending.

Gross domestic product (GDP) expanded at a 2.6 percent annual rate in the Commerce Department’s first estimate for the second quarter of 2017. In the first quarter, real GDP increased 1.2 percent, a downward revision from the earlier estimate.

The uptick reflected increased consumer spending, exports, and increased spending by both the federal government and businesses. Private housing investment, private inventory and state and local spending declined. Imports, which subtract from GDP, rose.

The pace of economic growth was in line with the expectations of economists.

EXPLAINING GROSS DOMESTIC PRODUCT

The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year. The United States has a GDP of $18,869.4 billion as of the fourth quarter of 2016, according to the Bureau of Economic Analysis.

As one can imagine, economic production and growth – what GDP represents – have a large impact on nearly everyone within that economy. For example, when the economy is healthy, you will typically see low unemployment and wage increases as businesses demand labor to meet the growing economy. A significant change in GDP, whether up or down, usually has a significant effect on the stock market. It’s not hard to understand why; a bad economy usually means lower earnings for companies, which translates into lower stock prices. Investors really worry about negative GDP growth, which is one of the factors economists use to determine whether an economy is in a recession.

source: Investopedia

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