Some might quibble about a strict comparison between growth now and those price movements: the betting is that US GDP is no better now than it was in the 4th quarter and probably a bit weaker.
Currency traders recognise the damage being done: the US dollar fell to a record low of 1.50 to the euro yesterday; that will add to the inflation impact of rising commodity prices, especially oil.
And despite the 1.25% drop in official interest rates this year, 10 year bonds have risen by around 0.40% in the past month to be around 3.87% in the US as bond traders forget the credit crunch and subprime mess and wonder about their old bugbear, inflation.
It confirms the emerging feeling in the US and many other economies that everything is on the rise, petrol, commodities such as sugar, wheat, consumer products such as bread, pasta, milk, coca and coffee, not to mention oil, copper and gold.
And while we in Australia and in other well performing economies such as China and India are somewhat insulated because growth is strongly positive, it doesn't mean we are exempt or will be exempt from the pain promised by central banks, like our Reserve Bank.
In China inflation continues to rise - to 7.1 % on the latest measure; our inflation is running at around 3.6% according to the December quarter CPI and the RBA's version of the index; US consumer price inflation hit 4.3 % in the year to January; US producer price inflation was 7.5 %, highest for 26 years.
A measure of US inflation expectations says it has risen in the past year from 2.2 % to 3.4 %, the highest in a decade; US indicators of activity, most recently manufacturing activity, are indicating slump, heading perhaps for recession.
The British economy is facing rising inflation, as is Europe.
And commodities are surging, week after week: Soft wheat hit an all time high of more than $US12.14 a bushell in Chicago on Tuesday night, sugar is above 14 US cents a pound for the first time in over a year; coffee and cocoa prices are at their highest level for a decade or more and oil prices are over $US101 a barrel, having bounced from $US88 a barrel three weeks ago. Some of this is due to financial investors playing in markets with momentum after the credit and sharemarkets tanked late last year. But much there are more 'ordinary reasons'.
Gold, silver and platinum are higher.
That's as much due to the inflation bears buying as falling and intermittent production from South Africa where a lack of power and safety issues are having a big impact on output.
Steel prices in Asia are surging because of those huge iron ore gains won by exporters like Rio Tinto and BHP Billiton: next it will be big gains on coal: possible a doubling in price for hard coking coal.
The cost of cars and everything using steel will rise, especially in the back half of 2008. The higher price for platinum alone will cause car makers to boost prices because the important exhaust systems are rising in price.
But in the US a special state of affairs exists:
In Australia for example, house prices are firm to rising (although that will change over the course of this year). In the US house prices are falling, foreclosures worsening and the cost of everything else is rising. No wonder consumer confidence has fallen to a five year low.
A senior member of the US Federal Reserve said yesterday in a speech that the impact of the housing slump and subprime mortgage crisis is still a bigger threat to the US economy than inflation.
That's the wrong way of looking at it: inflation, the credit crunch, subprime mess and housing slump are the big threats to the US economy because inflation is destroying the declining spending power of US consumers as that spending power is falling. US consumers are being crunched from all sides.
US petrol now costs 75 USc a gallon more at $US31.15 national average last weekend, than it did a year ago. That makes an awfully large dent in household budgets and in retail spending.
No wonder people are heading for Wal Mart in their droves for cheap groceries and clothing: other retailers such as Macy's, Target and Home Depot are seeing sales fall and earnings with them.
Naturally there are two schools of thought. Optimists about the real economy say the Fed has already done enough to spark recovery and needs to be ready to tighten monetary policy briskly to prevent inflation from getting worse as recovery strengthens.
Pessimists say the coming recession will fix inflation, and the Fed should keep easing. Australia also faces rising inflation, but with a very different picture of real activity. Restrained wage inflation and a tough budget are needed if we are to avoid more inflation - but the pressure from global inflation and local excess demand inflation is already considerable.
Tough minded central banks are the only sure protection, and global inflation is already on the march. We will see that next week when the RBA lifts rates 0.25% to 7.25% for the cash rate.
The impact of the subprime mess and credit crunch continue to ripple through the Us economy. An index of home prices in 20 US metropolitan areas fell by 9.1% in December from the same month a year ago and using a three-month moving average, the Standard & Poor's Case-Shiller, is falling at an annual rate of more than 20% for single family homes in the US, the overwhelming majority of housing.
The US conference board said its consumer confidence index fell to a reading of 75 for February, from 87.9 last month. The index was last at this level in early 2003, at the start of the war in Iraq and a time when the economy was growing.
