This week was a mixed bag of encouraging economic news and dismal forecasts from everyone who matters. I’ll do my best to keep the statistics to a bare minimum, but there are a couple of pertinent numbers that deserve our attention.

First and foremost, our 1st quarter Gross Domestic Product growth was revised upwards from +0.6% annualized to +0.9%. That implies that our economic slowdown isn’t quite as shocking as analysts 1st expected. Also, the core inflation reading was revised downward ever so slightly from +2.2% to +2.1%, meaning the cost of goods and services is rising, but not as rapidly as we’d 1st thought. Both items are surprisingly good news for our country’s economic situation.

But of course, right as I’m breaking out the party hats and champagne bottles, Warren Buffett comes forward in all his ridiculously smart and wealthy glory and tells a German interviewer that the U.S. economy is already in a recession as far as the average person in concerned. For those of you that don’t know who Warren Buffett is, he’s like the Oprah of old, rich men. The investment guru went on to state that he sees that this recession we are already allegedly in will be “deeper and longer than many think”. So, I guess it’s time to put away the Dom Perignon and break out the Natural Ice.

Yum.

The Federal Reserve also lowered their growth forecast and simultaneously raised their expectations for both inflation pressure and unemployment in their latest press release. Sounds like a party to me. The kind of party that makes grown men cry.

At a technical level, a recession is defined as two consecutive quarters of negative GDP growth. So far, we haven’t had a single negative quarter. But all semantics aside, we are in a very anemic growth pattern as a country, and sometimes a prolonged stagnation can be worse for John Q. Public than an overt downturn. I do agree with what the Mr. Buffett is saying, as much as I hate to admit it. The fun­damental problems that caused our credit crisis have not been purged from the system yet, and until that happens, we’re in for a rocky ride.

In other news, inflation concerns are still assailing the countryside. In a recent study released by JP Morgan, the anticipated rate of headline inflation will reach 5% by this summer. To give some con­trast, we’re at 3.9% now. That would crimp the already abused consumer discretionary spending and slow our economy down even more. But here’s the bigger problem: the THOUGHT of inflation be­coming a self-fulfilling prophecy. Let me explain. Mr. factory worker believes that prices are going up. To adapt for his loss of spending power, he and his union buddies rally for higher wages. The factory complies, but has to raise their product prices in order to offset the higher wages they are pay­ing. And bada-bing, we have an inflationary trend.

I don’t think it’s going to play out that way, though. Companies don’t want to increase their prices and become less competitive in the international marketplace if they can help it. However, that money is going to have to come from somewhere. So, if I had to guess, I’d say we’re gearing up for a big series of layoffs in the foreseeable future. Now would be a good time to comment on how good your boss’s hair looks.

Dallas Fed Governor “Loose Lips” Fisher noted that if price expectations continued to worsen in the coming months, Fed policy makers would opt to raise interest rates “sooner rather than later” even if the economy is weak. So, if you’re planning on capitalizing on the low rates we have available, you probably want to get the ball rolling fairly soon. Don’t say I didn’t warn you.