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GDP Grew Last Quarter? Only If You Believe In Santa Claus

05/01/2008 10:25 am ET | Updated May 25, 2011

The recession-deniers were out in force yesterday after the "better-than-expected!" GDP figures came out: See? The economy GREW in Q1! We aren't in a recession! All that horrendous economic and housing data is just media hysteria!

Here's what they didn't tell you:

First, those are just preliminary numbers. Maybe hold the champagne until the several rounds of revisions are out.

Second, 0.6% growth is horrible, especially when you consider that the population is growing at least 1%. On a per-capita basis, GDP was down.

Third, as the NY Post's John Crudele explains, the much ballyhooed "growth" was the product of three key inputs, none of which is a sign of consumer recovery, and one of which is absurd:

* government spending (deficits),
* inventory growth (companies buying stuff to put on shelves), and, most importantly,
* a 2.6% inflation assumption.

Get that? To calculate that the economy grew 0.6%, the government had to assume that inflation was only 2.6%. Anyone out there who buys gas or food occasionally think that inflation is only 2.6%? Didn't think so.

Move that inflation assumption up to even 4%, says John Crudele, and GDP in Q1 was down. For the second quarter in a row. Which makes this an official recession. As if we didn't know that already.