Thursday, May 01, 2008

Easy Money

The news that the American economy has not yet entered a recession has been widely reported, but those accounts have also been quick to label economic growth as being weak, based on the first quarter GDP growth of 0.6%.

However, I had not seen prior to reading this Wall Street Journal editorial that the increase in first quarter GDP is a much more robust 1.8%, if one excludes the housing sector, in which the bubble has recently burst.

That figure makes the Federal Reserve's decision to cut the federal funds rate yet even more curious. Not since the end of the Carter era has inflation posed so great a threat to American economic well being.

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