Where is the Economy ?

It's fair to say the prophets of doom had the run of the economic agenda until fairly recently but there have been some "green shoots" of optimism. From President Obama to City AM Editor Allister Heath, there has been a change of emphasis with pundits claiming the bear market is over, a new bull market is coming and that even the recession is over (according to that lunatic Cramer on MSNBC).

Now, to be fair, Allister Heath admitted this morning that while the Goldman Sachs figures suggested the US financial sector was improving, the general economy faced a long period of at beast very slow growth and at worst near stagnation. Writing, as he does, for a financial audience, it's understandable that Heath, who is an unreconstructed Thatcherite and no fan of Gordon Brown, should emphasise the signs of an upswing in the banking sector but even he recognises there is a long way to go.

Even though some indicators have suggested things may not be getting any worse and Heath dismissed talk of a "Depression", the shock news of a fall in US retail sales in March has jolted market optimism with the DJIA falling back below 8,000 (still a gain of nearly 1,500 points from its early March low).

Whether the recovery in stock prices from the early March lows is a genuine rally or a bear market rally remains to be seen but the battle between optimists and pessimists goes on while the economy falters. Next week is Budget Day and we may well see a sobering assessment of Britain's economic prospects from Alastair Darling along with (perhaps) some tax rises.

None of this will help Allister Heath's bete noire, Gordon Brown, who must be wondering how he can turn some disastrous polls round in the next 12 months.