Q4 GDP Report Was Weak & Inflation Moderated

The headlines in the financial press today suggested that Q4's real GDP was strong. On closer inspection, it was relatively weak and consistent with our view that the economy has been in a "rolling recession" since early last year when the Fed started to tighten monetary policy.

Real GDP rose 2.9% (saar) following 3.2% during Q3 (chart). However, real final sales of domestic product rose only 1.4% during Q4 down from 4.5%.