U.S. Q4 GDP GREW AT 1.4%

I can’t believe they titled this ‘better than expected.’  One point four percent is an abysmal growth rate. Please.

More importantly, profits dropped by 3.1%, the most in 7 years.

Stripping out inventories and trade, the two most volatile components of GDP, so-called final sales to domestic purchasers increased at a 1.7 percent rate, compared with a previously estimated 1.4 percent pace.

Friday’s report also offered a first look at corporate profits for the period. Pre-tax earnings declined 7.8 percent, the most since the first quarter of 2011, after a 1.6 percent decrease in the previous three months. The estimate of nonfinancial corporate profits was reduced by a $20.8 billion settlement, considered a transfer to the government, between BP and the U.S. after the 2010 oil spill in the Gulf of Mexico.

Profits in the U.S. dropped 3.1 percent in 2015, the most since 2008. Earnings are being weighed down by weak productivity, rising labor costs and the plunge in energy prices.

“If profits remain depressed, the prospects for capex and hiring will come under greater pressure,” Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, wrote in a research note.

Corporate outlays for equipment declined at a 2.1 percent annualized pace, subtracting 0.12 percentage point, the Commerce Department said.

The median forecast was for a gain of 1%. Now in the rational world, these numbers put the Fed on ice. But since they’re crazy and view things through a distorted lens, they might just view this as a hot number, one that calls for action.