Q1 2007 GDP was revised lower this morning, down to 0.6%. Economic bulls and the Fed continue to forecast an abrupt change in this trend.

On the other hand, Nouriel Roubini writes: “This writer has been a serious bear on housing for a long time: but after listening to these most sophisticated analysts of housing, mortgage lending and the MBS markets from a top global financial firm my concerns seemed almost not bearish enough. The main message from these analysts and the data is that the housing recession, the subprime carnage and the broader mortgage mess are getting worse, not better; and things will get worse well into 2008. There is no end in sight to the housing recession and we are only in the first innings of the mortgage credit crunch.

As for private consumption (that is about 70% of GDP) its prospects are now weak and cast a serious shadow for US economic growth in the quarters ahead.”

Nouriel, that’s right. You are not nearly bearish enough. That’s what being an economist will do for you. Economics isn’t the dismal science anymore, now it’s the science of cheerleading market and economic manipulation. Pump ‘em up, pump ‘em up, pump ‘em up, waaaay up! So far the game is Keynesians 1, Austrians 0. But it is far from over.