Looking for the Economic Recovery

As the head of the state economic and revenue forecast council said earlier this month,

It increasingly appears that we are finally approaching the end of this “Great Recession.”

But signs of recovery continue to elude investors and economists. Warren Buffett, for example, tells CNBC, he sees no signs of recovery yet. From the interview:

Everything that I see about the economy is that we've had no bounce.  The financial system was really where the crisis was last September and October, and that's been surmounted and that's enormously important.   But in terms of the economy coming back, it takes a while.  ...  In the (Berkshire Hathaway) annual report I said the economy would be in a shambles this year and probably well beyond.  I'm afraid that's true.

James Hamilton at Econbrowser continues his skepticism. After reviewing the components of the Conference Board Leading Economic Index (graphs and discsussion here), Hamilton writes:

... maybe we could summarize the recent strength in the leading economic index this way. The main reason we think the economy is improving is because many of us think the economy is improving.

This all comes as jobless claims took a large unexpected bounce.

The Labor Department data released Thursday show jobs remain scarce even as the economy shows some signs of recovering from the longest recession since World War II.

That bit about "signs of recovering" increasingly sounds more hopeful than analytical. But hope's good, right?

Ted Van Dyk, writing at Crosscut, has a nice discussion about how the economy plays into the Obama administration's hopes - there's that word again - for sweeping health care and energy reform. First, he sets the stage.

Most economists continue to predict recession's end by late this year or early in 2010.

But on Main Street, recovery seems distant. Unemployment rates are reaching toward 10 percent (far higher than Obama said they would go) and will not trend downward until months after the actual recession ends. Small business failures have increased. Financial markets seem unlikely to rally strongly until good news drives out the bad.

Then this.

Next week consensus will begin to form around the principal elements of the health-care and energy plans, which will then become characterized as the Obama Plans. ... Obama, finally, will have to make definitive decisions about the elements he will accept. It will be increasingly difficult for the President to keep talking in general terms about reform. He will need to defend specific provisions of the bills in play.

If the economy were growing, at full employment, and generating rising tax revenues, the task would be difficult. In the midst of recession, and with federal debt sharply increasing, it will be more than difficult.

In their current form, both proposals threaten to inflict severe damage on a struggling economy. (See this Wall Street Journal piece to get an idea of the cost of cap-and-tax. And we've linked here to just a few of the persuasive critiques of the health care plan.) If concerns about the economy make it difficult to pass bad legislation, we'll all be well served.