GDP tillväxt dålig..

Fourth-quarter growth was weaker than expected, but not as weak as the headline suggested. Real gross domestic product grew at a 0.6% annual rate, well below the 1.2% consensus. But most of the surprise was in inventories, which actually declined.

It?s rare for the level of inventories to decline: it usually only happens in recessions.

The last time it happened was in the second quarter of 2003, and that period, like the present, was marked by extraordinary uncertainty ? in that case over the invasion of Iraq. (That uncertainty was a major reason the Fed lowered the federal funds rate target to 1% that June to ward off deflation.)

In the quarter just ended, most of the downside surprise in inventory liquidation took place in the motor vehicle sector, evidence of how sober manufacturers have been about future sales. It could also be a quirk that may be reversed in the current quarter.

Consumption spending grew only at a 2% annual rate in the fourth quarter, short of the 2.6% forecast but respectable considering all the negatives affecting consumers that quarter.

What does this mean for the first quarter? Inventory liquidation can be seen in two ways. Either it?s a sign that businesses are so gloomy about sales that they don?t want anything in their warehouses at all right now. Alternatively, it could be a sign that they have been so efficient at keeping production in line with sales that they might be pleasantly surprised in coming months. Of course, both things could be true

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