A low GDP growth rate does not necessarily mean an unhealthy economy - there are other factors involved too.
This guest article was written by Nikolai Kuznetsov from NikolaiKnows.com.
The chart below shows how GDP in the United States have been faring over the last decade. Just as a reminder, the GDP is considered the biggest measure of the growth and the output of the economy. It is the sum of consumer spending, government spending, national investment and net exports.
According to Trading Economics the US economy is shrinking. Even though the economy grew at a stellar rate at the beginning of 2015, there has been a consecutive five-quarter decline in the growth rate of the economy. That’s the first time this is happening since the first quarter of 2010 – about when the economy started recovering from the last financial crisis.
And even though the stock market suffered in the first quarter, times are currently rosy for stocks. In fact, the S&P 500 registered a new all-time high during April. The ironic part, however, is that positive vibes from the economy were the main factor that propelled the stocks. But as far as we know with the GDP indicator, the economy is not in a pretty situation. So the question now is why the stock market is faring well in recent times despite the lackluster economic growth. There is a two-word answer for that: crude oil. The crude oil market has had an influence on both the GDP and the stock market.
First, the GDP and the crude oil market. As stated earlier, one of the variables that goes into GDP calculation is business investments. That is, if business investment in a given time is strong, there’s a good chance that the GDP will fare well, as it’s one of the biggest inputs. However, some or all of the other variables have to be healthy to achieve growth.
On checking what these variables have looked like, one finds that consumer spending has been strong. And while governmental spending is down based on historical standards, it’s been pretty much on the rise over the last three years. And it currently lurks around pre-recession levels.
The two biggest culprits for the poor growth are the net export and investment variables. And the crash in the crude oil market has played a part in ensuring the two are down. As for the investment variable, since the oil business is capital intensive, the cut in investment by energy companies due to the oil market turmoil weighed heavily on investments.
In essence, the low GDP growth rate doesn’t exactly describe the growth rate of the US economy. This is embodied by strong consumer spending and job data. And this is a big reason why the stock market is on the rise despite the 'entire' economy showing signs of weakness.
From what we know already, as long as the oil market stays low, US GDP could still be low – except for a significant spike in other variables. In addition, as long as consumer spending and job data stay strong, the stock market is likely to keep on performing.
This guest article was written by Nikolai Kuznetsov from NikolaiKnows.com.
The chart below shows how GDP in the United States have been faring over the last decade. Just as a reminder, the GDP is considered the biggest measure of the growth and the output of the economy. It is the sum of consumer spending, government spending, national investment and net exports.
According to Trading Economics the US economy is shrinking. Even though the economy grew at a stellar rate at the beginning of 2015, there has been a consecutive five-quarter decline in the growth rate of the economy. That’s the first time this is happening since the first quarter of 2010 – about when the economy started recovering from the last financial crisis.
And even though the stock market suffered in the first quarter, times are currently rosy for stocks. In fact, the S&P 500 registered a new all-time high during April. The ironic part, however, is that positive vibes from the economy were the main factor that propelled the stocks. But as far as we know with the GDP indicator, the economy is not in a pretty situation. So the question now is why the stock market is faring well in recent times despite the lackluster economic growth. There is a two-word answer for that: crude oil. The crude oil market has had an influence on both the GDP and the stock market.
First, the GDP and the crude oil market. As stated earlier, one of the variables that goes into GDP calculation is business investments. That is, if business investment in a given time is strong, there’s a good chance that the GDP will fare well, as it’s one of the biggest inputs. However, some or all of the other variables have to be healthy to achieve growth.
On checking what these variables have looked like, one finds that consumer spending has been strong. And while governmental spending is down based on historical standards, it’s been pretty much on the rise over the last three years. And it currently lurks around pre-recession levels.
The two biggest culprits for the poor growth are the net export and investment variables. And the crash in the crude oil market has played a part in ensuring the two are down. As for the investment variable, since the oil business is capital intensive, the cut in investment by energy companies due to the oil market turmoil weighed heavily on investments.
In essence, the low GDP growth rate doesn’t exactly describe the growth rate of the US economy. This is embodied by strong consumer spending and job data. And this is a big reason why the stock market is on the rise despite the 'entire' economy showing signs of weakness.
From what we know already, as long as the oil market stays low, US GDP could still be low – except for a significant spike in other variables. In addition, as long as consumer spending and job data stay strong, the stock market is likely to keep on performing.
UK Chancellor Jeremy Hunt Clashes with FCA over Controversial “Name and Shame” Policy
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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