Don't Get Too Excited

Thanks to a late gain today, the stock market advanced for the fourth consecutive day.

It's the best such streak the stock market has had since Thanksgiving.

When the market opens for business on Monday, the Dow Jones will be at 7,223.98, Nasdaq will be at 1,431.50, and S&P will be at 756.55.

And there is some (apparently) good news from Citigroup, reports CNN's Alexandra Twin. "Citigroup Chairman Richard Parsons told Reuters late Thursday that the company won't need any more government help and that it will stay a publicly traded company. The stock plummeted in recent weeks on fears that it would have to be fully taken over by the government. Last week, the government said it would lift its stake in Citigroup to as much as 36%.

"Citigroup said earlier this week that it was profitable in the first two months of the year. JPMorgan Chase and Bank of America have also said that the start of the year has seen some improvement."

It's good news that the stock market enjoyed its best week of the year, but does it mean the recession is nearing an end?

Well, I'm no economist, but it seems to me that a single week does not define an economic trend. This time next week, the gains from this week may be wiped out and we may be talking about the brutal week that Wall Street has just been through.

I hope that isn't the case because signs of a reviving stock market can encourage consumers to spend again, which will encourage employers to start adding people to the payroll. And, in an economy that has lost 4.4 million jobs since the recession began in December 2007 — and has been shedding more than 600,000 jobs a month since 2009 began — anything that leads to improvements in the job market will be welcome.

Especially since the normal rules of a recession don't apply to this one.

"This recession is incredibly broad-based," said Mark Vitner of Wachovia Corp. "Parts of the country that have traditionally weathered recessions fairly well are being impacted."

Of course, the question that people want to have answered is, "When will we hit bottom?" There is no simple answer to that — except that it's like the transition from winter to spring. The transition won't be obvious when it happens. It will only be apparent in hindsight, when we can look back at the numbers and realize that things began to turn around at a particular time. I don't recall hearing anyone, back in December 2007, announce that a recession had begun. It will be about the same when the recession ends.

Michael Silverstein at The Moderate Voice blog tries to apply some logic to what's happening on Wall Street. "Is this a bad thing? Nah. It's actually quite a good thing. If it makes people generally feel better about markets they may shop more, and if they are employers maybe fire less. And when you get right down to it, since the whole ecology of economies is basically sustained by belief or lack thereof, we really needed this kind of boost."

But Silverstein reminds readers that there are other factors that can affect the market.

"Now if only Pakistan holds together, Israel doesn't nuke Tehran, no major world leader is assassinated, and a volcano in Indonesia doesn't turn the world's summer to winter," he writes, "we may have a bit of a market-based economic upturn in coming months."

So hold off on popping those champagne corks.

Let's see what happens next week — and the week after that and the week after that.