Happy days not quite here again for Fed still wary of zero rates

Washington

THINGS are looking up. US growth forecasts are on the rise, employers continue to add jobs without stressing inflation, and consumer and business sentiment have bounced impressively.

But don't get too excited. Recoveries don't last forever, and whenever this one comes to an end, it may be difficult to argue the economy will have, in fact, recovered.

"We've seen a sea change in sentiment, but I think people are getting a little carried away," said Joseph Davis, chief economist at Vanguard Group Inc, the world's biggest mutual fund company. "The forces that matter all point to a world of lower growth."

The difference between a cyclical upturn that bumps US growth modestly above the post-crisis average of 2.1 per cent and a structural shift that restores pre-crisis levels …