That is the question posed by CNBC's Senior Features Editor Albert Bozzo. The headline of his report is, "US Economy Could Recover Much Sooner Than Expected".
His rationale is, "Among the reasons for the new optimism: a significant easing of the credit crunch, improvement in consumer spending, a potential bottom in housing, a less-grim jobs picture and expectations that the government's massive stimulus spending could start boosting economic growth sooner than later."
Let's take it point by point.
1.) The "significant" easing of the credit crunch: I don't think that anybody would disagree that there is a correlation between the access to credit and the amount of credit losses. Banks won't continue to extend new credit in large volume when their credit losses continue to escalate. In terms of credit losses, by all indications, defaults on credit cards and foreclosures are actually escalating. As recently as last week, former Bank of America CEO was quoted as saying, "We continue to face extremely difficult challenges, primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment."
2.) Increases in consumer spending: Yes, consumer spending rose 2.2% this quarter when compared to the fourth quarter of 2008. But when you consider that many economists are projecting double digit unemployment, I don't think that consumer spending will continue to be able to drive this economy as it has in the past. In fact, in March, consumer spending actually dipped by 0.2% according to the Commerce Department.
3.) The potential bottom in housing: A bottom in home sales, maybe. A bottom in home values, not even close. And the reason is that while home sales may have hit a bottom (which is contingent upon unemployment not rising) there are still too many homes for sale and foreclosures coming to the market which will continue to put downward pressure on home values for the foreseeable future. Home values are driven by supply and demand and we still have a ways to go until we can remove the excess supply. In fact, one of the most glaring red flags about the current month's supply of housing is that it has only declined by 2% from last year, this despite the broad based foreclosure moratoriums that have mitigated this housing disaster up until now.
4.) A less-grim jobs picture: Here is the thing, I like to look at the preponderance of evidence. One or two moderate weeks of job news does not point to an economic recovery. What I see is that the month over month changes in terms of monthly job losses have only shown an escalation.
5.) The government's massive stimulus spending: By most indications the stimulus bill is back loaded. What this means is that even if it has any meaningful impact on the economy, it won't be until 2010 or 2011. It certainly is not the basis for a 2009 economic recovery.