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The BEA reported that preliminary U.S. GDP growth for Q2 2007 was an astounding 4%. This was a revision upwards from the advance GDP forecast of 3.4% released a month ago. The revision was due to updated information that showed imports were lower than initially estimated.

Q2 GDP growth of 4% was quite a jump from Q1 GDP growth of only .6%. The last time GDP was that low was in Q1 2003, the tail-end of the last recession. For a review of the most recent GDP reports, see GDP Current Statistics. (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%. It seems surprising that GDP should jump so dramatically, especially since 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. Also, watch for a possible change in the final GDP report, due out in a month.

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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