Investors should be careful what they wish for, since a few more tepid GDP reports like yesterday’s and someone might have to declare a recession. We’d almost begun to believe that any evidence whatsoever of a faltering economy would be music to Wall Street’s ears, since that, supposedly, is the only thing that might convince the Fed to stop tightening. Would that things were so simple. As we observed on Thursday, there’s a Catch-22, and it is this: Any sign of weakness sufficient to cause the Fed to change course is also likely to darken shareholders expectations for the future.

At any rate, we now know roughly how much bad news it takes to trigger their flight response, and the answer is: not much. The Dow Industrials fell 128 points on news that first quarter GDP had grown at a 3.1%, the slowest in two years and a tad shy of the 3.5% expected. To make things seem worse, it was reported that fully one third of the growth was caused by the biggest inventory build-up in nearly five years – about $80 billion worth of goods. (Does anyone care how much of that growth came from Federal spending? Apparently not.)

Nowhere in evidence was the capital spending boom that yo-yos like Larry Kudlow keep telling us will happen if consumers can just binge for a little bit longer. I wonder how the Street would react if honest GDP figures were released? Strip out the “hedonically” adjusted manufacturing numbers, goose the inflation rate so that it accords with what every American consumer already knows, ratchet down “imputed” (i.e., non-existent) income and spending that now amounts to nearly a trillion dollars – that sort of thing. If all of these fictitious contributions to the economy were omitted, one wonders whether we would appear to be growing at all.