It seems likely that the formal end of the recession will be in the current quarter of this year. Thus the question becomes what will follow: stagnation, modest recovery or real growth? The conventional wisdom is that with the continuing turmoil in the housing markets and the terrible problems still facing the banking sector, growth will be tepid at best. So that is what we hear consistently from the MSM....slow growth, stubbornly high unemployment, double-dip recession, etc.
I think it is entirely possible that the recovery will prove to be stronger than expected for several reasons. First, conventional wisdom is usually wrong. Second, we are starting from a level of reduced expectations and dismal consumer psychology which, in an odd way, provides ample room for upside surprises. Third, the US economic system is resilient, and far more flexible than our European and Asian competitors. Fourth, the stimulus spending will really start to kick in next year...which is also an election year. Finally, interest rates are going to remain very low for the foreseeable future.
Of course, the degree of strength in the recovery will be in the eye of the beholder (and with some dramatic geographic variance) and unemployment is going to be remain unacceptably high for too long. But given how close we came to a real crash (or "panic" in the classic sense) last September, it is remarkable that less than a year later we can even be having this discussion.
