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Economic forecasters exist to make astrologers look good. But the recent jubilance is enough to make even weather forecasters blush.

The economy is going gangbusters! Just look at consumer spending!

Look at home prices! Look at the bull market!

Please.

I can understand the jubilation in the narrow sense that weve been down so long, everything looks up. Plus, economists who are paid by Wall Street or corporations tend to cheerlead because they believe that if consumers and businesses think the future will be great, theyll buy and invest more -- thereby creating a self-fulfilling prophecy.

But prophecies cant be self-fulfilling if theyre based on wishful thinking.

The reality is were still in the doldrums, and the most recent data gives cause for serious worry. Jobs are still scarce. The share of the working-age population in jobs remains the lowest in 35 years, before wives and mothers began streaming into paid work.

And wages are still going nowhere. Most of the new jobs created since the recovery began pay less than the jobs that were lost in the recession, which means consumer spending will slow because consumers just dont have the money to keep spending.

Yes, consumer spending is up. The Commerce Department reports that consumer spending rose 3.4 percent in the first quarter of this year.

But thats only because Americans have been saving less. The personal savings rate dropped to 2.3 percent -- from 5.3 percent in the last quarter of 2012. Were down to the lowest level of savings since before the Great Recession. You dont have to be an economic forecaster, or an astrologer, to see this cant go on.

See the original post here:
The real economy: The weather is still stormy