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Curb Your Enthusiasm: Many Experts Glum Despite Brighter Data

By    |   Wednesday, 04 April 2012 07:58 AM

Recent months have revealed surprisingly positive economic reports on job growth, incomes, and consumer spending. Yet most economists remain gloomy.

For instance, in a recent research note Goldman Sachs predicted a slow recovery, according to The Washington Post.

GDP numbers are still weak, warm weather provided an early boost economic boost. Businesses will not continue rebuilding their inventories, and rising gasoline prices are putting a dent in consumer discretionary spending, Goldman Sachs notes, according to the Post.

Editor's Note: Obama’s Economic ‘Fix’ is In . . .

“We suspect that once the weather and the seasonal adjustment factors normalize in March and April, the economic data won’t look so ebullient,” writes David Shulman, an economist with UCLA Anderson, in an essay called "Curb Your Enthusiasm."

Mild weather in January and February, he asserts, meant fewer workers kept from their jobs and lower home heating bills that acted as stimulants for the labor markets.

Part of recent employment gains are in response to prior growth, not expectations for future growth, according to Shulman. Although GDP grew 3 percent in the last quarter of 2011, it will slow to about 2 percent for most of 2012.

“The stronger employment data are not appearing to translate into stronger overall GDP growth," Shulman states.

Plus, he adds, the looming expiration of all of the Bush era tax cuts and the payroll tax cut will elevate economic uncertainty in the second half of the year.

Pessimistic forecasts might be partly due to the fact that earlier optimistic forecasts failed to materialize.

For instance, in August 2008 at the height of the recession and financial crisis, leading economists said unemployment would average 6 percent in 2009, recall Wharton School professors Betsey Stevenson and Justin Wolfers, in an article for Bloomberg. It turned out the unemployment exceeded 9 percent.

Editor's Note: Obama’s Economic ‘Fix’ is In . . .

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Wednesday, 04 April 2012 07:58 AM
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