Watch a weather forecast sometime, and you may notice something.  When the forecasting horizon goes out beyond, say, three or four days, the forecast of temperature always seems to revert back to the seasonal average. Unusually cold or hot outside at the moment?  It will taper off in four days.

That forecast reflects the fact that the current information -- which figures so prominently in determining tomorrow's forecast -- is of much more limited value in telling us what will happen after the winds blow through and it’s four days later.

Those same factors come into play in an economic forecast, as well.  Recessions, like hot spells, are temporary phenomena, after all.  Saying that they will end is a safe, virtually foolproof forecast.  But saying that they will end in the coming months is another matter entirely.

There is a great deal of concern over the state of the U.S. economy as we enter the second half of 2003.  That concern is reflected in the Federal Reserve's decision to drop short-term interest rates further below already record-low levels, and to state publicly that it will hold them there for as long as it takes.  And for the labor market, at least, it might take a while.

And yet economists, almost without exception, are bullish about our second half prospects.  The Blue Chip Consensus forecast, which pools the opinions of several dozen professional forecasters, calls for economic growth to accelerate from 2.0 percent in the first half of 2003 to 3.6 percent in the final six months of the year.

The reasons for the optimism are clear. Consumer income, languishing in the spring, has picked up steam and is expected to continue to accelerate.  Investment incentives enacted in the most recent tax bill, along with an improving earnings outlook, are expected to finally jump start business spending on plant and equipment.  And a buildup of inventories, pared to the bone as companies cut costs, will give the economy the extra boost to finally get businesses to come out of their foxholes.

Should we be reassured?  Probably.  It’s nice to hear that it will be sunny tomorrow, but we might want to keep our umbrellas out nonetheless.  A lot of things have gone wrong in the past to make bold economic forecasts for the second half of the year go awry.  And this one is no exception.

The key to watch for with respect to the U.S.economy will be the performance of the labor market.  Few economists expect a sudden surge in hiring anytime soon.  The so-called "jobless recovery" experienced in the wake of the 1991 recession is back with us again. More than eighteen months after the low point of the 2001 recession, and the national unemployment rate is still rising.  In the first six months of 2003, the economy actually lost almost a quarter million jobs.

That has to stop if these rosy projections about the year-end economy are to come true.  Job declines threaten consumer spending, which has kept this recession from turning much worse.  We are within sight of healthier, more robust growth, without doubt.  But the limb we are standing on is showing signs of strain.