CIBC Capital Markets chief economist Avery Shenfeld cautions that, though we may see some big growth numbers in this early stage of economic recovery, we shouldn't be deceived: It's going to be a slow climb out of the depths [PDF]:
While a North American recovery is indeed beginning to build, it will be a while before we have a clear picture of its strength and durability. The first leg of growth could prove a bit hotter than suspected, at least stateside. With government stimulus in the US kicking in just as manufacturers restart production to rebuild inventories, American third quarter growth could top 3%.
To some, that could look a lot like a “V” shaped rebound we’re all hoping for. But the true measure of success will be just how quickly private sector final demand is coming back, after stripping out the one-time boosts coming from inventory rebuilding, cash for clunkers, first time homebuyer grants, and tax cuts. If, as we expect, the fragility of the US household sector and a still-strained financial system keeps private sector demand on a lackluster track, what looks at first glance like a “V” might be better pronounced like a “U”, with a longer wait for sustained brisk growth to return.