How could the economy grow 3.4% in Q2, after posting the slowest GDP growth rate in four years for Q1? The BEA released the advance GDP estimate for Q2 today, and credits an increase in exports and an increase in business spending for the drive in growth. This was despite slowing residential construction and slowing personal consumption spending. (Source: BEA Advance Q2 2007 GDP Estimate)

What It Means to You

It looks like the declining dollar has rescued GDP growth. The declining dollar means U.S. exports are cheaper relative to foreign goods, so the world will buy more of our products.

However, personal consumption drives 70% of the U.S. economy, and real estate drives 10%. Both are down. This is a long-term trend that should be kept in mind.

Furthermore, keep in mind this is the advance estimate, and the Commerce Department will revise the number in August and September as new data comes in. The Q1 estimate was revised down from 1.2% to .6%, so the same thing may happen here.

Related Articles

• What IS the U.S. Economy?
• What Is the Ideal GDP Growth Rate?
• Dollar Decline or Dollar Crash?