PRESTOPUNDIT

U.S. economic growth rate -- 7.2 percent -- and the inflation rate quadruples. Here's the U.S. gov's official press release.

And Paul Krugman reverts to anti-Keynesian economic logic 101:

First, while there was a significant pickup in business investment, the bulk of last quarter's growth came from a huge surge in consumer spending, with a further boost from housing. These components of spending stayed strong even when the economy was weak, so there shouldn't have been any pent-up demand. Yet housing grew at a 20 percent rate, while spending on consumer durables (that's stuff like cars and TV sets) — which last year grew three times as fast as the economy — rose at an incredible 27 percent rate last quarter.

This can't go on — in the long run, consumer spending can't outpace the growth in consumer income. Stephen Roach of Morgan Stanley has suggested, plausibly, that much of last quarter's consumer splurge was "borrowed" from the future: consumers took advantage of low-interest financing, cash from home refinancing and tax rebate checks to accelerate purchases they would otherwise have made later. If he's right, we'll see below-normal purchases and slower growth in the months ahead.

This is what Friedrich Hayek or Roger Garrison would call burning the candle at both ends -- it's a classic unsustainable Keynesian funny-money boom generated by a false system of prices imposed on the market by the government, with false interest rates coming from the Federal Reserve and false tax rates coming from the Federal government. The market is being pushed further from sustainable coordination through time by these false prices. The market has been fighting to re-coordinate after the Federal Reserve screwup of the last seven or eight years. Rather than helping the process, the false prices of the Fed Res and the Fed Gov have only delayed things, and have assured that the yo-yo of economic fluctuations will continue to gyrate rather severely. Buckle up for another bumpy Fed sponsored rollercoaster ride.