When the economy is healthy, there is usually low unemployment and wage increases, as businesses demand labor to meet the growing economy.
However, if the GDP growth rate is speeding up too fast, the Federal Reserve may raise interest rates to stem inflation—or the rising of prices for good and services. That could mean loans for cars and homes would be more expensive. Businesses too would find the cost of borrowing for expansion and hiring to be on the rise.
If GDP is slowing down, or is negative, it can lead to fears of a recession which means layoffs and unemployment and declining business revenues and consumer spending.
The GDP report is also a way to look at which sectors of the economy are growing and which are declining. It can also help gear workers toward training in those sectors that are growing.
By using the another very strong indicator that affects the stock markets is the unemployment rate. Like GDP, rate of employment illustrates the development and the strength of the economy. The Jobs Report is reported monthly by the U.S. Bureau of Labor Statistics and accounts for approximately 80% of the workers who produce the entire gross domestic product of the United States. The statistic is used to assist government policy makers and economists in determining the current state of the economy and in predicting future levels of economic activity.