Despite over a year of proclamations to the contrary, recovery remains elusive. Sure, growth has resumed, and some of the movement is eye-catching. But there is a big difference between the end of recession and the start of recovery. Genuine recovery requires a much more sustained, aggressive growth pace than we have experienced to date, and much higher levels of activity than we currently see. We may have recovery in our sights, but we’re not quite there.

Current growth may be inspiring, but it comes with a catch: all told, it’s pretty stimulus-heavy. Consider that OECD nations collectively grow by about 2–2.5% in an average year. Then consider that member nations have on average piled stimulus worth almost 4% of GDP into their economies, mostly within a tight 8 –12-quarter timeframe. By any standard, the impact is huge. Programs in certain key emerging markets are even more aggressive, increasing the difficulty of sorting out the transitory from the true. One is left wondering what economic numbers might otherwise look like.

Thankfully, stimulus is buying time until the true recovery kicks in. Are we almost there? We won’t arrive until the enormous excesses that piled up at the end of the boom period are worked down. The good news is that the work-down has been steady and aggressive. The bad news is that we’ll have to wait until year-end before market balance leads to a typical resurgence of key economic drivers.

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