Q1 GDP Growth Revised Up Slightly

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The BEA released the final Q1 2007 GDP growth rate, which was .7%. This was a slight revision upwards from the revised GDP growth rate of .6% released a month ago. The revision was due to updated information that showed personal consumption expenditures were a tad 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, although I haven't seen anything other than the durable goods report to indicate such. Housing, which comprises 10% of the economy, is continuing to decline. Therefore, the Q2 GDP advance report that comes out on July 27th is critical in helping us understand the direction of the economy.

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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