Economic forecasters exist to make astrologers look good

Economic Storm Clouds Ahead

By Robert Reich, Robert Reich's Blog
01 June 13

Economic forecasters exist to make astrologers look good. But the recent jubilance is enough to make even weather forecasters blush. "Just look at the bull market! Look at home prices! Look at consumer confidence!"

Please.

I can understand the jubilation in the narrow sense that we've been down so long everything looks up. Plus, professional economists tend to cheerlead because they believe that if consumers and businesses think the future will be great, they'll buy and invest more - leading to a self-fulfilling prophesy.

But prophesies can't be self-fulfilling if they're based on wishful thinking.

The reality is we're still in the doldrums, and the most recent data gives cause for serious worry.

Almost all the forward movement in the economy is now coming from consumers - whose spending is 70 percent of economic activity. But wages are still going nowhere, which means consumer spending will slow because consumers just don't have the money to spend.

(Continued here.)