Is the recession over?

With news reporting the recession is finally over and the stock market recovering over 50% from the March 9^th low, we need to ask: is the economy truly improving? Many in the financial media and on Wall Street would like you to believe this is the case.  However, a further reflection of what's truly happening on Main Street shows a completely different tale:

It's estimated that:

·         Unemployment will hit double digits

·         One in three commercial loans is on verge of default

·         Payments on over one million adjustable rate mortgages are about to significantly increase

·         Personal bankruptcies are up 33 %

·         Business bankruptcies may increase by over 60% before 2009 comes to a close

Dead cat bounce?

Not to be all doom and gloom, but we need a little dose of reality.  Did we not learn anything from the crash of 2008?  Based on all the economic data, what we are most likely seeing with the stock market recovery could be what's known as a dead cat bounce.  A dead cat bounce is a figurative term used by traders in the finance industry to describe a pattern wherein a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement, with the connotation that the rise was not an indication of improving circumstances in the fundamentals of the stock.  

This could very well be the case with the overall markets. We went so low with the crash. The Dow was at 14,000 in October of 2007 and hit 6,500 in March of this year.   A stock market recovery can happen occur simply because selling was overdone which I believe was the case. Should the Dow be near 10,000?  

Money hides problems

Get this: when the US government throws that amount of money (over $700 billion) at the economy, it's bound to have some effect.  In the short run it can make things look better than they actually are before reality sets back in.  The government has traditionally relied on the auto and home industries to pull us out of a recession, but with this recession so deep it's simply not working as intended.

Any look at the recent data on employment, demand for credit, consumer spending numbers, and the lack of saving being done by Americans, shows a pattern:  there is little hope of a quick, sustained economic recovery.  Though the U.S. economy may truly be out of a recession, this does not mean a consumer recession will cease. Americans are trapped by their debt. Too many are in over their heads and are facing unemployment, less hours, lower pay, increased taxation, and an inability to keep up with debt payments.