Thomas Carlyle had his own reasons for labeling economics the dismal science, and today’s economists seem intent on proving that the label applies in the circumstances of today’s American economy. After all, we are being treated to some really good news, especially compared with that being dished out to our European trading partners. Top of the list is the housing market. The much-followed Standard & Poor’s Case-Schiller housing price index recorded its tenth consecutive rise and the largest gain in seven years, with all 20 cities covered by the index showing significant price hikes, and the 20-city average up 10.9 percent on year-earlier levels. Sales of both new and existing homes are up, as are applications for building permits, foretelling a rise in construction activity. All of this in the face of a payroll tax increase that hit workers’ paychecks to the tune of about $700 per year on average at the beginning of this year.

Enter those economists included as practitioners of Carlyle’s “dreary, stolid, dismal” science. Hold the applause: houses prices remain 27 percent below their July 2006 peak. Alternatively, they are now unsustainably high: we are in the midst of another housing bubble. It will pop on the morning that Fed chairman Ben Bernanke wakes up and decides to accede to the wishes of his hawkish colleagues and begin pushing rates up, which have started to rise a bit after Bernanke so much as mentioned he might do the dirty deed of withdrawing support for asset prices. That could occur as early as the next meeting of the monetary policy committee on June 18, or perhaps later in the summer. Prices will plunge, investors will flee, foreclosures will rise, and we will be right back where we were when the housing bubble burst in 2006.