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All this good news is really bad.
So says famed economist Nouriel Roubini in unsurprising comments to CNBC on Friday.
The legendary bear says tax increases on wealthy Americans and reduced government spending will have a severe impact on economic growth in the United States this year, wiping out the positive effects of a revival in the housing market and cheaper energy, according to the network.
CNBC notes his comments come as investors eye the release of nonfarm payrolls data in the U.S for further clues on the health of the economy.
Speaking at the 2013 Ambrosetti Workshop, Roubini, co-founder and chairman of Roubini Global Economics and an NYU professor, warned that despite some positive indicators for growth, a number of key issues would hold it back.
"These taxes, taxes for the rich, are going to significantly reduce disposable income, and retail sales have been a disaster,” he said. “And there are already signals of consumption growth slowing down, as well as the sequester, and the fiscal drag this year will be 1.5% of GDP (gross domestic product) for an economy that was barely growing last year.”
Despite what the network calls encouraging signs of a renewed housing market; a revolution in shale gas, which could result in cheaper energy; and the effects of quantitative easing (QE), U.S. growth would be "1.5% at best this year," Roubini said.
"Even without U.S politics [there would be a drag]," Roubini said. "We've stolen growth from the future, and now there needs to be payback for the mistakes made in the past. [The U.S.] needs to start some austerity."
CNBC says Roubini agreed that while equity markets were a positive, investors should brace for a shock in the latter half of the year as revenue begins to disappoint.
"It's positive because of the direct wealth effect and a signal that things might be improving, but of course sometimes the stock market gives the wrong signal, and I think the markets will be surprised by how much the U.S. will slow down even compared to last year and the second half of the year," he said. "The U.S. stock market could correct somehow."
Jim O'Neill, the soon-to-retire chairman of Goldman Sachs Asset Management, disagreed with Roubini's gloom over the U.S. economic recovery and his view of the equity markets.
"If we get further follow-through (on the U.S. nonfarm payrolls on Friday), I can see people starting to get really excited about the cyclical momentum of the U.S. economy," he told the network.
"As chaotic as Washington seems, the way they're tightening fiscal policy is better than in Europe," he said. "Slowly but surely, the U.S. fiscal picture is improving. Here in Europe and the U.K., they're focusing too much on austerity."
"We have come a long way. I'm generally in the bullish camp, so nothing happens in a straight line, the momentum behind the U.S. numbers is good. It's pretty interesting despite the so-called fiscal drag," O'Neill said. "Valuation wise, the U.S. market is nothing like as attractive as it was, but the momentum from the numbers is there, so what's going to cause it to top?"
CNBC also said Roubini warned that the power of QE was now "becoming ineffective."
"The net wealth of the household has increased in the last quarter, and it boosts confidence but it has less effect on the real economy. If you take away QE too fast there could be a significant backup in long rates, and that would kill the recovery," he said.
"As other countries continue aggressive QE and suffer from broader economic weakness, (that implies) that the dollar can have some upside risk in a situation where the other currencies, whether it's the yen, the British pound or the euro may be weakening."
Read BRIC Inventor O’Neill Checks Out Early From Goldman Sachs on AdvisorOne.