Business investment fell. Commercia

Business investment fell. Commercial building fell. Inventories fell. Inflation came in less than 1 percent.

Nominal GDP — real output plus inflation — registered a small 1.5 percent gain. In normal times, money GDP should be between 4 and 5 percent.

Perhaps most troublesome to the stock market and the economy is the decline in corporate profits. According to most estimates, profits are set to drop for the third straight quarter while business sales look to be falling for the fourth straight quarter. Add this to less than 1 percent economic growth, and the risk of recession is surely rising.

The recession threat is a risk, not a fact. But for Fed policy makers to tell us the economy is healthy is a complete misreading of the situation. And with ultra-weak economic growth and ultra-low inflation, how could the Fed, or any central bank, think about tightening policy?