I see. Roger is in the “Yes, there are challenges, but essentially the U.S.S. Economy is sailing into calmer waters” school of thought.

First the nominal GDP is factored by the official inflation rate to produce the “real” 0.6% growth rate. Unfortunately, as anybody with their eyes open can see, the official inflation rate is ludicrously understated–making GDP appear higher than it is. Energy and food prices are regularly subtracted from the CPI and PPI figures. Why? Recognizing the real inflation rates would bankrupt the Social Security and USG pension funds even faster than present.

What about the stock markets? The S&P is at an average PE of 30 and only 10% off its all time high. That doesn’t feel awfully undervalued with $681 tillion (that’s right: TRILLION) worldwide in derivatives floating above considerably lesser-valued assets, both the commercial and residential real estate markets (upon which much of those derivatives depend) dropping, the Fed nearly out of interest rate bullets, a slumping dollar (see aforementioned interest rate bullets), Term Auction Facilities that had to be extended on an emergency basis overnight.

Admittedly, the MSM has been talking down the economy since Bush took office. Ironically, the financial press is pretty uniformly buying the “all clear” messages from the Fed, Treasury and the other mavens. Even a stopped clock is right twice a day.