Despite cheery forecasts, U.S. economy still stuck in the mud

Is the U.S. economy deflating like Tom Brady's favorite football or steadily marching its way toward the end zone?

That's the question as Americans look for signs that the recovery, going on six years since the Great Recession officially ended, promises better days to come.

Recent data are inauspicious. Economists who earlier this year were predicting that gross domestic product -- the value of all goods and services produced in a calendar year -- would grow at least 3 percent his year have been forced in recent weeks to ratchet back those forecasts.

"[T]he optimism seen in the first few months of the year has certainly cooled," said Peter Boockvar, chief market analyst with economic research firm The Lindsey Group, in a note.

The main culprit: a repeat of last year's winter-chilled first quarter. The economy likely contracted in the first three months of the year, which would mark an even weaker showing than the 0.2 percent pace of expansion the government announced in its initial estimate last month.

Experts attribute that decline largely to the hit the U.S. energy sector has taken from the slump in oil prices and the strength of the dollar, which has dented U.S. manufacturers sales overseas. The port strike on the West Coast and the unusually harsh winter in parts of the country are also cited as culprits.

"With every passing data release, the forecast for GDP growth heads lower," analysts with Bank of America Merill Lynch said in a note this week, who peg growth for the second quarter at -1.2 percent.

GDP expanded at rate of 2.4 percent last year and 1.9 percent in 2013, highlighting the economy's slow trudge back to respectability.

Federal Reserve Chair Janet Yellen seemed to downplay fears that the economy is slowing in a speech today to business leaders in Providence, Rhode Island, blaming the first-quarter freeze on the weather and other temporary factors.

Lindsey Piegza, chief economist with brokerage firm Sterne Agee, isn't buying it. "We're going to see a very disappointing second quarter -- still positive -- but disappointing," she said, pointing to an Atlanta Federal Reserve Bank forecast that puts growth in the April-to-June period at a meager 0.7 percent.

The quarter isn't over yet, of course, and many forecasters expect growth to recover from its early-year slide. But the early signs suggest a mediocre rebound at best, with retail sales flat last month and the slump hitting energy and mining companies pushing industrial production down 0.3 percent.

Piegza is equally pessimistic about prospects for employee wages, perhaps the most important barometer of economic health in a nation where consumers account for roughly two-thirds of economic activity. Hourly earnings, which have been stagnant throughout the recovery, are growing at an annualized rate of only 2.2 percent.

"Wages aren't going anywhere -- they're going sideways, as they have since 2010," she said. "There's still a tremendous number of individuals seeking employment, and very few finding it."

Weak pay growth may help explain why consumers, many still financially and psychologically scarred from the recession, are mostly banking their savings from lower gas prices or using it to pay bills.

Other forecasters are more optimistic, noting that the first quarter is typically the weakest of the year for the economy and pointing to transitory seasonal factors as having particularly damped growth between January and April. Paul Ashworth, chief U.S. economist with Capital Economics, expects GDP to rebound strongly in the second quarter, citing the looser credit conditions and the absence this year of fiscal feuding in Washington as factors likely to propel growth.

But economists -- and the Fed -- have throughout the recovery repeatedly had to walk back their cheerier predictions. For now, the U.S. continues to grind ahead, neither losing much yardage nor busting loose for a big gain.

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    Alain Sherter covers business and economic affairs for CBSNews.com.