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U.S. Federal Reserve chairman Ben Bernanke.
U.S. Federal Reserve chairman Ben Bernanke.

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U.S. GDP dip gets a pass from the Fed

You have to wonder if there weren’t a lot of erasers and white-out bottles feverishly flying around around the Federal Reserve’s boardroom Wednesday morning.

In the midst of a two-day meeting of the Fed’s monetary-policy body (the Federal Open Market Committee) – and just hours ahead of the release of the FOMC’s updated statement on its policy stance – the U.S. economy threw the central bankers a filthy knuckleball. The first estimate of U.S. gross domestic product growth for the fourth quarter showed a shocking contraction of 0.1 per cent – nowhere near the 1.1-per-cent annualized growth rate that economists had anticipated. Clearly, it was also nowhere near what the Fed anticipated, either; economists say the fourth-quarter numbers peg 2012 GDP growth at just 1.5 per cent, short of the Fed’s projection of 1.7 to 1.8 per cent that it issued just five weeks ago.