GDP Growth Stinks!

From Bloomberg, The Worst News Wasn’t Even in the GDP Report: by Caroline Baum

Not only was the increase in real gross domestic product the smallest in three years, but the composition wasn’t so hot either. Inventories added 1.5 percentage points to GDP growth, which means that final demand (GDP minus inventories) fell for the first time since the first quarter of 2002. (emphasis added)

That news combined with The Philly Index release makes it look like Dr. Kurt Richebächer (The Mess That Greenspan Made) was right about slow or no growth in the economy, contrary to the “Bubblespeak” on CNBC: of Jan 19th

The Philly Fed diffusion index fell to 3.3 in January from 10.9 in December. This is the lowest reading since last June. The index is only slightly above zero, which indicates expansion. The decline was unexpected. Economists were expecting the index to rise to 12.0.

When Richebächer saw the +1.1% GDP number he slammed his fist on the table and said,

“I knew it. They cheat … they rig up the calculations and still they can’t come up with a decent number. The recovery has totally failed. This latest number is just more evidence.”

We have seen the last rate hike by the FED!

Caroline Baum Dr. Kurt Richebächer economy

Update: That prediction didn’t last long: The WSJ reports

The Fed raised the federal-funds rate by a quarter percentage point to 4.5% in Greenspan’s final meeting as chairman, and deleted its longstanding reference to the likelihood of “measured” rate increases.

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