Does Wall St tell the whole story?

Wall Street

With the apparent recovery of the DOW Jones, companies such as Google and Apple and US GDP expected to rebound by the end of the month, it looks as if the recession is "statistically" over.

But its naive to think that the optimism sprouting from Wall Street is indicative of an overall recovery.

For the average American, the recession is still biting as hard as it did 12 months ago. Unemployment has doubled in a year, reaching 9.8 percent in September and, as BusinessWeek notes, there are about six unemployed Americans for every job opening.

Home foreclosure-related filings - including default notices, foreclosure auctions, and bank repossessions - are on pace to reach about 3.5 million this year, up from more than 2.3 million last year.

Federal tax credits expire

Even figures released that point towards a recovery in the real estate market must be viewed with caution. House prices are stabilizing and sales did climb in September, but with the federal tax credit for first time buyers set to expire very soon, this small-scale recovery is likely to be short-lived.

But in the fallout of a recession, it is standard for Wall Street to recover at a faster rate than areas such as employment. The danger is that people take these "leading indicators" as a sign of pending recovery before the "lagging indicators" have the time to catch up. This can, and has, led to confusion and disillusionment among the American consumer.

Because, on this occasion, Wall Street is soaring so far past the lagging indicators, a market recovery coupled with workers continuing to lose their jobs and the ability to spend, could lead to a W-shaped downturn. Basically, a second crisis could be just around the corner.

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