THE crummy employment market isn't the only thing casting doubt on President Bush's perception that "the economy is growing" and is "going to get stronger."
The low-inflation alarm is still blaring, too, although most have stopped listening.
Core inflation - the rise in consumer prices minus those for energy and food - was just 1.1 percent in January compared with the same month in 2003, according to a report Friday.
That tied November and December for the smallest year-over-year increase in the core rate "since the Beatles were on the Ed Sullivan show," says Standard & Poor's economist David Wyss.
Inflation emits important information about supply, demand and the money pool. And it's still broadcasting the message we started hearing shortly after Sept. 11, 2001: America, you have way too many workers and factories and - still! - not enough consumption of goods and services.
Economists had hoped higher inflation would signal growing demand for products and a dwindling supply of idle workers and business assets - the foundation of a sustained recovery.
It hasn't happened. The graph adjacent to this column shows an almost relentless drop in the core inflation rate during the last two years.
"None of the fundamental problems have gone away," says Lacy H. Hunt, a former Federal Reserve economist now with Hoisington Investment Management in Austin, Texas.
"We're choking on debt. There's no pent-up demand for cars and houses. We've got excess capacity in manufacturing. We've got excess capacity in the labor markets," Hunt says.
True, some analysts see inflation stirring in the overall consumer price index.
Friday's report showed general prices jumping at an impressive annual rate of 6 percent. But that was driven mostly by energy costs and says more about what's going on in China and Saudi Arabia than the U.S. economy. It won't persist, which is why many economists prefer to screen out volatile food and energy prices and eye the fundamental core rate.
It's also true that commodity prices have soared, which some believe could bleed into retail costs. The Commodity Research Bureau's spot-price index has popped by 18 percent since last summer. Gold is up 20 percent since early last year. We know about oil.
But as the American Enterprise Institute's John H. Makin points out, higher U.S. commodity prices can be explained mostly by a weaker dollar. Measured in euros, he says, commodity prices have been stable.
And commodities are a little part of the economy, anyway - only a 10th of the cost of production, Hunt says.
Nobody at the Federal Reserve has worried much lately about the prospect of deflation - falling prices - at least not out loud. But Friday's report underscores the fact that the meager rate of increase in consumer prices is still very close to the Fed's panic level.
Fed Governor Ben S. Bernanke, the central bank's chief deflation worrywart, has said he would be uncomfortable with core inflation below 1 percent. He's perilously close to that with the results issued Friday, and by another measure core consumer inflation was under 1 percent in the fourth quarter.
The closer inflation gets to zero, the higher the likelihood that prices and wages will start to fall, depressing profits and incomes, boosting the relative size of debts and killing consumption as shoppers realize they can get bargains by waiting.
Deflation, one of the most poisonous aspects of the Great Depression in the 1930s, was basically caused by a shrinking money supply as too few dollars chased too many goods.
Guess what? Despite Alan Greenspan's heroics, two key measures of the U.S. money supply contracted in the fourth quarter at the fastest rate since measurement started in 1959, Hunt says.
Depression-style deflation is probably impossible now because we are no longer linked to an inflexible gold monetary standard. Even so, weak inflation is telling us some disturbing things.
It's saying workers are in such great supply, thanks to unemployment, that companies can hire them for a song. It's saying plants and inventories are so numerous that retailers needn't get into bidding wars to stock their shelves.
It's saying the economy has a way to go before it enters a full recovery.