Cheery economic indicators such as improving consumer spending and falling unemployment rates merit applause but a look at the reality bolstering those numbers shows a still tepid economy, says Neel Kashkari, head of equities at Pimco, the world's largest bond fund.
"We see the headline economic numbers that look positive to the upside, which is great news but let's look underneath the surface," Kashkari tells CNBC.
"It's on the back of massive central bank intervention. The Fed said they're going to keep rates pegged to zero until at least 2014, that's a long time, massive monetary stimulus."
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Consumer spending, for example, has been on the rise but mainly due to people dipping into savings to make purchases and not due to a fundamental improvement in the economy.
Such trends never last.
"That is not a sustainable long-term proposition. We need to see consumption dollars going up because more Americans are working and able to save and put money away and so short-term spend something not our way out of this," Kashkari says.
"We need long-term fundamental economic growth and unfortunately, I don't think we've got it yet."
Unemployment rates are falling but that's due to more and more people quitting their job hunts out of frustration, which lowers the headline unemployment rate since those who cease job searches aren't counted as part of the labor force.
"Many Americans have given up looking for a job. That makes the unemployment rate look lower — it's closer to 15 percent if you include all of those," Kashkari says.
Will those discourage workers resume their jobs searches? That's a tough call.
"The longer they've given up the harder it is, they may want to come back. If you've been out of work for two or three years it could be difficult to re-enter the workforce."
Unemployment rates fell to 8.3 percent in January from 8.5 percent in December, although Federal Reserve Chairman Ben Bernanke says monetary policy will stay loose.
"Weakness in the labor force is frustrating to the Fed, which needs to see broadened participation from labor in this recovery," says Eric Green, chief market economist at TD Securities Inc. in New York, according to Bloomberg.
"What the Fed wants is the real stuff. They want unemployment falling with the labor force rising."
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