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Having a Ben Bernanke press conference immediately after the FOMC meeting where rates were kept at zero in Fed Funds is one thing, but the weakness and the implied economic downgrade is getting a little more justification this morning.  We saw a spike in jobless claims and the Gross Domestic Product is coming in a bit soft for any real ‘expansion’ after the recession we came out of.

The US Labor Department’s reading on weekly jobless claims is back to above the pain threshold of 400,000 again.  It is possible that a pre-holiday week impacted the data, but the reading showed a gain of some 25,000 to 429,000… Dow Jones was expecting a drop of about 8,000.

The 4-week average smooths out volatility, but even that rose by 9,250 jobs to 408,500.  The army of unemployed measured by the continuing jobless claims comes with a one-week lag, but that figure fell by 68,000 to 3.641 million.

The news on the GDP from the Commerce Department is not showing any great growth either.  The nominal and preliminary GDP for Q1 came in at +1.8%, in-line with the Dow Jones estimate.  The fourth quarter of 2010 was +3.1%.  Consumer spending accounts for about 70% of GDP and that figure came in at +2.7% versus 4.0% in the fourth quarter of 2010.  Perhaps the biggest reading will be in the inflationary price component via the PCE, which came in at +3.8% and that is the highest reading in over two years.

Soft GDP is one thing, trusting Ben Bernanke that all this inflationary pressure is transitory is another issue entirely.

Just yesterday we had a report showing how a double-dip recession may be unavoidable.  Technically a double-dip has already passed because the growth resumption lasted for more than one or two quarters.  Semantics aside, this recovery has just not offset the pain from the years of loss.

JON C. OGG