The gross domestic product (GDP) fell at an annual rate of 3.8% in the 4th quarter of 2008, the biggest drop since the first quarter of 1982.

This is better than expected, but probably worse than it sounds.

First, the Fed Funds rate had peaked at almost 20% in 1981, and was still at 15% in early 1982. The Fed was trying to create a recession to short circuit inflation. (See graph pr0n)

Also, I agree with Barry Ritholtz of The Big Picture when he says, “The advance GDP data was released. I expect the revisions will make this even worse.”

Meanwhile, Calculated Risk’s Credit Crisis Indicators are showing improvement, most notably with treasury yields increasing, which implies that there is more competition for that money from other borrowers and lenders.

That being said, we are in a very weird place economically when an increase in interest rates is good news.

There are some dark spots in the indicators, the Chicago Purchasers’ January Index fell to 33.3, the lowest level since March, 1982….There it is again…..1982, and the Restaurant Performance Index (RPI) fell to a record low in December, which means that we aren’t seeing much buying on a wholesale or a retail level.

In energy, oil is up on concerns about the refinery strike, and in currency, the dollar is up on low Euro Zone inflation numbers, which suggest that the ECB might cut rates again.