What Does 1.2% GDP Growth Mean to You?

I realized that I got so caught up in my blog yesterday about the similarity between 2000 and now that I neglected to explain the relevance of the low GDP growth rate. The BEA reported that the economy has slowed to 1.2% growth thanks to slowing residential construction, slowing exports, and slowing business spending. Consumer spending, at $8.3 trillion, is the main driver of growth.

What is the consumer spending more money on? I don't have to tell you that it is higher expenditures in such categories as food ($1.1 trillion), medical care ($1.3 trillion) and durable goods, such as cars and furniture ($1.2 trillion). (See BEA News Release: Full Release)

What It Means to You

That part I did cover yesterday. A slowing GDP growth rate means a slowing economy. Businesses have already started to cut back in spending, as we saw in the recent Durable Goods Orders Reports. Consumer spending may start to slow, too, since families are relying more and more on credit card debt.

Protect yourself from the risk of a slowing economy by being more conservative in your spending, developing a budget, and rebalancing your retirement portfolio. That way, you will be prepared for a 1.2% GDP growth rate, and in really great shape if things get better.

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