The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

U.S. Federal Reserve chairman Ben Bernanke.
U.S. Federal Reserve chairman Ben Bernanke.
(JIM BOURG/REUTERS)

Subscribers only

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.