What Moves the Markets: Basic Fundamental and Technical Trading Strategies 96 Gross Domestic Product Every quarter, the government releases the percentage growth of the gross domestic product (GDP). The GDP is a broad measure of all economic activity in an economy. An advanced indus- trialized society such as Europe, Japan, or the U.S. prefers to see GDP growth between 3 and 5 percent. Anything lower indicates that the economy is in danger of stalling. Anything higher means the economy is heating up too fast and is in danger of inflation or a sudden crash. Developing countries can grow at much higher rates, but that has risks as well. China, for example, grew more than 8 percent in 2003 and broke 9 percent in the first quarter of 2004. Rather than please China's leaders, however, these red-hot numbers made them nervous. Too much growth and too much money can set up a country for a serious fall, as had happened in Thailand. To prevent this, Chinese leaders began tightening credit, which would reduce lending and cause the economy to cool, or experience a "soft landing," rather than crash. Several other indicators, like the GDP, hint at economic growth. These include housing starts and retail sales. When both are high, it's genefrally considered a sign that the economy is doing well, but it may also prompt an interest rate hike. (Un)Employment Employment figures are an important indicator of an economy's health. A strong economy creates new jobs, thus providing employment for the hundreds of thousands of people who enter the work- force every year. However, if the economy is growing strong and there are more jobs than people to fill them, wages begin to rise as companies compete for the best workers. This can be great for individuals but bad for the economy. When wages rise too fast, so does inflation, which forces the central bank to raise rates and cool the economy. When that happens, the job market traditionally