What's going on?

The first official estimate of US economic growth in the first quarter of this year is in� and it�s a pretty mediocre 0.5% (that�s an annualized figure).

What does this mean?

Overall, the US economy grew 2.4% last year, so a 0.5% annualized rate for the start of this year isn�t very good. However, for 5 of the last 6 years, growth in the first quarter has been significantly slower than the rest of the year � so this could just be another smokescreen. Chances are that it�s a real slowdown though. Business investment � which means things like businesses buying new equipment � fell almost 6% in the first quarter, which is worrying because those sorts of things are supposed to drive future production. Also, the weakness actually started in the fourth quarter of last year – so it appears more entrenched than previous years.

Why should I care?

The bigger picture: The economic data doesn�t paint a coherent picture. The US unemployment rate is at a historic low of only 4.9% but the economy is barely growing. That doesn�t make sense: companies don�t hire people when they�re struggling. Nevertheless, that�s exactly what the data is telling us. Chances are that both data points are a little wonky: for example, the economic data probably isn�t properly accounting for the benefits of technology (here�s a good article on the subject) nor is the jobs data properly reflecting the number of potential workers that have given up looking for work. So, the picture is muddled � but the economy probably isn�t as bad as Thursday�s data suggests (this anomaly is occurring in the UK and Germany too by the way).

For you personally: Remember when we told you how important you were? Well� you didn�t pull through! Growth in Americans’ spending fell quite significantly versus last year�s pace. It�s curious because, apparently, incomes are still growing reasonably well. Perhaps people feel like they should be saving some money for a rainy day (given the current economic climate).