Gross Domestic Product sums the value of all goods and services produced within an economy over a period. It is released quarterly in three passes — advance, preliminary, and final — with markets reacting most to the first, earliest estimate. Two consecutive quarters of negative GDP growth is the commonly used (though not official) definition of a recession.
Why it matters
- —Expanding GDP means more corporate revenue, more hiring, and more spending — the macro backdrop every business operates inside.
- —Equity markets are forward-looking and typically fall 6–12 months before a recession is officially confirmed in the GDP data — by the time the headline is bad, the worst of the price decline has often already happened.
- —GDP is a lagging, low-frequency signal compared to PMI or jobs data — useful for confirming a regime, less useful for predicting a turn.
How to read it
| Accelerating GDP growth | Early-to-mid expansion — favours cyclicals |
| Decelerating but still positive | Late-cycle — favours defensives |
| Two consecutive negative quarters | Recession (commonly used definition) |