Yesterday, the BEA reported that U.S. GDP growth for Q1 2007 was a moribund .6% This was a revision downwards from the advance GDP forecast of 1.3% released a month ago. The revision was due to updated information that showed imports were higher than initially estimated. The last time GDP was this low was in Q1 2003, the tail-end of the last recession. (Source: GDP News Release)

What It Means to You

This report means that the U.S. economy produced about the same as it did in Q1 2006. A healthy growth rate is about 2-3%. Many economists, including the Federal Reserve, believe that the economy will pick up in the second half of this year, but they don't say what will cause such an improvement. Housing, which comprises 10% of the economy, is continuing to decline. Therefore, the economic indicator reports that come out in the next few weeks, are critical in determining whether the economy will improve, or continue its downward trend. In times like these, I always say “Hope for the best, but prepare for the worst.” Now would be a good time to talk to your financial planner about taking a more conservative approach with your personal finances.

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