Wall Street might be riding high on the Federal Reserve’s bubble, but the rest of the economy is limping along. The Wall Street Journal reports that the economy came to a “screeching halt” in December and GDP “unexpectedly” declined in the 4th quarter of 2012.

U.S. economic momentum screeched to a halt in the final months of 2012, as businesses pared back inventories and government spending fell sharply, while lawmakers struggled to reach a deal on tax increases and budget cuts.

The nation’s gross domestic product shrank for the first time in three and a half years during the fourth quarter, declining at an annual rate of 0.1% between October and December, the Commerce Department said Wednesday.

It’s the first time the broad measure of all goods and services produced by the economy contracted since the post-financial crisis recovery began. Economists surveyed by Dow Jones Newswires had expected a 1.0% annualized growth. (Read More)

How can this be? The Democrats keep telling us that food stamps and unemployment are huge drivers of the economy. To hear them talk, you’d think GDP would be chugging along at 5% growth, instead we’re pining for the days of sluggish 2% growth.

Check out the chart at Zero Hedge showing what we got for the billions in debt racked up by the Fed. Just don’t do so right after you’ve eaten.

Also via Zero Hedge, enjoy this video from Punk Economics explaining why the economists are so often wrong.

Update: Here’s Rick Santelli saying “We are now Europe.” How true.