There was a bit of consternation (not much actually) last week when the Gross Domestic Product (GDP) came out at 1.6% vs. and expect 2.0%+. Barry Ritholtz makes the case that real GDP was actually close to zip, and that the revised numbers will be in the .5%-1.0% range.

This sounds about right. Without the GDP number being massaged the way it was, the real numbers would have tanked the stock market just before the election. This is simply unacceptable for the Republicans who control the flow of economic information to the marketplace. I suspect we're going to see some ugly GDP numbers right after the election, including Barry's predicted revision. All the while, that housing market just keeps on trucking'! ..... down.

But here's the really tricky part. Today the "core" inflation rate came out:

WASHINGTON (Reuters) - Core U.S. consumer prices rose by an expected 0.2 percent in September, but a year-on-year inflation index remained close to an 11-year high in a sign of persistent inflation risk, a government report showed on Monday.

The overall inflation rate dropped due to the drop in energy. But remember, the Fed doesn't look at the real inflation rate, but rather the "core" rate.

If Barry is correct, and if the core rate is that high, doesn't that look a bit like stagflation? And if the Fed perceives that inflation continues at unacceptable levels, won't they have to increase interests rates at a time when a recession is looming?

I'm certainly no economists. But I do know that you can't run the economy the way Bush has for years and not have some chickens getting ready to roost somewhere. But, like I said above, I suspect that roosting won't happen until after November. In the meantime, a quiet rumbling continues across the countryside.