Did we miss something? One minute the fourth horseman of the apocalypse is saddling up, preparing to ride through the US housing and jobs markets trailing all hell behind him, the next he's hanging up his spurs as the call goes out that the American economy is in remission.
At least, that's what certain members of the business commentariat would have us believe this week. And leading the charge of the bulls is our old friend Daniel Gross, whose new lease on economic optimism has inspired the latest cover of Newsweek – a shouty stars-and-stripes affair that proclaims "America's Back!".
Says Gross: "The long-term decline of the US economy has been greatly exaggerated. America is coming back stronger, better, and faster than nearly anyone expected – and faster than most of its international rivals. The Dow Jones industrial average... is up 70 per cent in the past 13 months... The economy added 162,000 jobs in March... The dollar has gained strength, and the US is back to its familiar position of lapping Europe and Japan in growth. Among large economies, only China, India, and Brazil are growing more rapidly than the US – and they're doing so off a much smaller base."
Gross doesn't deny there's been some drama, and he gives a cursory nod to impending short-term pain, but beyond that, he says, a great deal of the "current pessimism" harks back to America's "historical economic inferiority complex" – you know the one... you don't?
But when this psychosomatic economic haze clears, continues Gross, it will reveal a shiny new US economy; one with "fewer McMansions ...and more well-insulated homes, fewer Hummers and more Chevy Volts, less proprietary trading and more productivity-enhancing software, less debt and more capital, more exported goods and less imported energy. Most significant, there will be new commercial infrastructures and industrial ecosystems that incubate and propel growth – much as the Internet did in the 1990s."
And he's not the only one set to break out the bubbly. "The great recession is over. The worst is now behind us. America's economic recovery is for real," enthused the chief of Putnam Investments, Robert Reynolds, in a speech to the Detroit Economic Club on Wednesday.
As quoted on Reuters, Reynolds points to US equity values – up more than 75 per cent since bottoming out in March 2008 – and says that the rally appears to be earnings driven, "which is why the stock market surge seems well-grounded, not a bubble continuing to rise."
He also gives a tip o' the hat to rising retail sales, some "stabilisation" in home values "in certain parts of the country" and stronger consumer confidence as more signs to rejoice.
And then there's the recent trilling from over Treasury way, that the government bailouts are on the cusp of being declared a true success, with the projected cost of the TARP shrinking to just a fraction of previous estimates.
So is all this optimism to be believed?
Certainly, the market rally has been impressive. According to a "fascinating chart showing the bell curve of historical 55 week rallies" posted (and thusly described) by Barry Riholtz on The Big Picture, it ranks in the top 1 per cent of all 55 week rallies.
But an impressive market rally does not an economic recovery make. In fact, there are many points of departure between Wall Street and the actual, real-world economy, says Gary North on LewRockwell.com. Such as the familiar market slogan, "sell in May and go away", that refers to the US summer being a good time to be out of the market.
But "home sellers do not sell in May and go away," says North. "They list in May and begin to pray. They wait for June to bring Prince Charming. Then July. In early August, they begin to panic. They have had no visitors. That is when price-cutting begins in earnest.
"This year," he continues, "price cutting may begin in July."
"The economy is still weak," says North, "unemployment remains high, businesses are not hiring, commercial banks are not lending, the crash in commercial real estate is accelerating... Meanwhile, politicians are not cutting taxes or cutting the deficit. They are raising both."
And Andrew Ross Sorkin of the NYT's DealBook isn't convinced either. "Outside of Wall Street and Washington, the numbers will never look good enough, because to most people it’s not about justifying the bailout but about avoiding another financial mess in the future. It’s about moral hazard. It’s about right and wrong."
Also among the naysayers, says Sorkin, is Nobel-winning economist Joseph E. Stiglitz. And he quotes: "'I think this is disingenuous and a real attempt to distract people,' Mr Stiglitz, the author of Freefall: America, Free Markets, and the Sinking of the World Economy, said of the latest claims."
And for the final word, here's more from Gary North: "When the academic experts in recessions and recoveries postpone a decision to announce the end of the recession, the economy is weak.
"When the engine of recovery – residential real estate – is headed for rising mortgage rates, rising foreclosures, and the end of the tax credit, the recovery looks less sustainable.
"When Keynesian economists call for another stimulus, the traditional Keynesian policy is failing to deliver the goods.
"...A political earthquake has begun. ...This is all to the good politically. But it does not solve the problem of the faltering recovery."