Dreaming in the mud

GSS: The economic freefall of the first quarter is no more than a fading nightmare. But when will a substantial recovery start? The world’s stock markets have their answer: right away. Another good week on the exchanges brought the US market to its 2009 high. Investors were cheered by earnings reports that were less bad than expected and revised forecasts that were less dire than the previous predictions.

It may be hard to believe when equities are surging, but the economic news on the ground is still pretty weak. The list of problems is daunting: huge losses in commercial real estate, slow bank lending, woes in much of central Europe and caution among consumers and companies. Big industries, including airlines and carmakers, are still in serious trouble.

The Breakingviews.com Green Shoots Spotter remains firmly stuck at “Getting less bad”. Last week it registered 2.0 – on a scale of 1 (Still in real trouble) to 5 (Rapid recovery). Forward-looking markets see things getting much better. If they are right, this indicator should start rising soon. As yet, though, the markets seem to be living firmly in the future.