Economy Skids to Near Halt

I guess our Dear Leader must have missed the memo on 4Q GDP increasing
a scant 0.6 percentage points.

But he's 'The Decider', so if he decides to thump his mighty chest and
bellow 'there ain't no re-session, and there ain't gunna be no dang re-
session, neither, dang it!" ' then that should be good enough for you
and me...

/snark/


Meanwhile, from the *RBC:

Economy Skids to Near Halt
By JEANNINE AVERSA - 2 hours ago

WASHINGTON (AP) -- The economy skidded to a near halt in the final
quarter of last year, clobbered by dual slumps in housing and credit
that caused people and businesses to spend and invest more sparingly.

The Commerce Department reported Thursday that the gross domestic
product increased at a scant 0.6 percent pace in the October-to-
December quarter. The reading -- unchanged from an initial estimate a
month ago -- underscored just how much momentum the economy has lost.
In the prior quarter, the economy clocked in at a brisk 4.9 percent
pace.

Gross domestic product measures the value of all goods and services
produced in the United States and is the best barometer of the
country's economic health.

Economists had thought the newly released fourth-quarter GDP would
have been bumped up to a 0.8 percent growth rate.

The housing picture looked even more bleak in the new report.

Builders slashed spending on housing projects by a whopping 25.2
percent on an annualized basis in the fourth quarter, the biggest cut
in 26 years.

And, even though economic growth slowed, inflation picked up -- an
ominous mix that could spell further trouble for the economy.

Fears have grown that the country is heading for a recession or is
already in one.

The National Association for Business Economics expects economic
growth in the current January-to-March quarter to slow to a meager 0.4
percent pace. Some analysts believe the economy's performance could be
even worse and actually shrink during this period. Under one rough
rule, the economy would have to contract for six months in a row for
the country to be viewed as in a recession.

With risks lurking that the problems could intensify and further hurt
the economy, Federal Reserve Chairman Ben Bernanke made clear he
stands ready to lower a key interest rate again. The Fed, which
started cutting interest rates to bolster the economy in September,
has turned much more aggressively recently. In eight days in January,
the Fed slashed rates by 1.25 percentage points -- the biggest one-
month reduction in a quarter-century. Rates are expected to move lower
at the Fed's next meeting on March 18.

Bernanke, however, is hopeful that previous rate reductions and the
$168 billion economic aid plan of tax rebates for people and tax
breaks for business will energize the economy in the second half of
2008.

A gauge of inflation linked to the GDP report showed that "core"
prices -- excluding food and energy -- grew at a rate of 2.7 percent in
the fourth quarter. The inflation reading -- although unchanged from
the government's initial estimate -- showed that inflation had picked
up sharply from the third quarter's 2 percent pace.

The inflation figure is above the Fed's comfort zone -- the upper bound
of which is a 2 percent inflation rate.

With inflation rising as the economy slows, fears are increasing that
the country may be headed for a bout of stagflation. That's a scenario
the country hasn't experienced since the 1970s.

Even though Bernanke has made clear the Fed's top priority -- for now --
is trying to get the economy back on track, he also says he remains
mindful of inflation risks, especially from high energy prices.

Oil prices have reach new record highs, galloping past $100 a barrel
in recent days. High energy prices can spread inflation by boosting
the costs of a wide variety of other goods and services and can put a
further damper on overall economic growth by crimping consumer
spending.

http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD8V3BNFO0

..
..

note: *RBC = Reality-Based Community

The reality-based community is "...people who believe that solutions
emerge from your judicious study of discernible reality. That's not
the way the world really works anymore. We're an empire now, and when
we act, we create our own reality."

- actual quote by an aide to President (Emperor?!?!) George W. Bush
http://tinyurl.com/47tnj
.

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