Budget & the Stock Market: GDP – Understand it because it is what finally drives everything, from stock prices to interest rates

This is the number behind all the other budget numbers. Whether the fiscal deficit “looks” disciplined at 4.4% or worrying at something higher depends not only on borrowing, but also on the GDP number used for that percentage. The same is true for tax-to-GDP, debt-to-GDP, expenditure-to-GDP, and the “quality of spending” ratios that investors track. So, as an investor, treat “nominal vs real GDP” not as textbook theory, but as the lens through which every fiscal ratio – and therefore every bond-yield and valuation debate – is ultimately viewed.