The Recovery Ain't Here Yet

The imminent recovery did not have a great day.

Some preliminary Thanksgiving holiday sales numbers trickled in Tuesday — sales are up decently, with most discount chains hitting their weekend forecasts and most department stores missing theirs. Some economic numbers are in too — the Conference Board's November consumer confidence numbers were unexpectedly down for a fifth straight month, to 82.2 from 85.3, a 7-year low. But home sales are still going up. And mortgage and long-term interest rates are still going down.

So what's it all mean? Don't pop the corks on the recovery-is-nigh champagne just yet. The stock market, in a roller-coaster day, decided again that 9800 for the Dow is still a little low until we hear something worse — and 10,000 is still a little high until we hear something better.

What the markets, corporations and consumers are of course trying to figure out on a daily basis is when the recovery will come, how hot it will be and what that means for markets, corporations and consumers. And the trouble with the latest news is that, well, nobody's quite sure yet when spring will come.

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"Rising unemployment and continuing layoff announcements are dampening confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center. "A turnaround in confidence levels is not likely before year's end, nor are retailers likely to enjoy a blockbuster holiday season."

The 5,000 households surveyed seem to have internalized that a recovery is coming — optimism about the future was on the rise — but the holiday shopping season, and the chance to stop the Sept. 11 economic bleeding, is now, and right now, those who have been laid off aren't having much luck finding new jobs, and those who haven't been laid off are worried that they could get that pink slip soon.

They're right to be. The best news about the current recession may be that the rear-view-mirror wizards at the National Bureau of Economic Research say it officially began in March, ending the longest expansion on record right on its 10th birthday. (The NBER's average recession doesn't tend to last more than 10 months or so, so it might be almost over already.) On the other hand, the NEBR notes that most recessions include a drop in real incomes, while this time they have continued to rise steadily. And while this recession has notched a historically precipitous 6 percent decline in industrial production (as opposed to a 4.6 percent average), total employment has only fallen 0.7 percent, just two-thirds the average.

So far. Unemployment will continue to rise throughout the winter and whether or not a recovery takes root in the spring, companies will continue to cut back on their biggest and most stubborn expense — people — until they're absolutely sure the economy is ready. And while economists are nearly unanimous that the economy has probably bottomed already and will be on the upswing again by the recession's new 1-year anniversary, they're also saying it could be a year-long road back, and that the new peak of the U.S. business cycle won't be anything like the 5-percent-GDP-growth heydays of yesteryear. All of which is not likely to spur a corporate hiring spree anytime soon.

Safe predictions: Consumers will continue to feel glum about the job market for at least a few more months, and retailers will continue to try to lure them into the stores (and burn off inventory) with deep discounts and big sales. Corporations will continue to take advantage of the cheap-money environment made possible by the Fed — not by investing, which was what the Fed had in mind, but by issuing new debt to pay down older, more expensive debt issuances. Congress will continue to argue whether corporate tax cuts or government spending will be the best and fastest economic stimulus (the correct answer is neither), and George W. Bush will continue to pretend he's an independent.

And the rest of us will just have to wait and see.