Hopes rise as green shoots appear

Analysts in the US are reporting signs of green shoots in the economy which is fuelling talk of an early recovery - possibly as early as Jan 2010. However, any talk remains tentative as economists warn that recessions often present promising signs that eventually come to nothing, and with the World in the middle of an unprecedented global downturn, few experts are throwing their weight behind the forecasts.

Friday's news of 663,000 job losses in March has served to drain confidence in the financial sector, and those figures coupled with the news that an average of 5,945 consumers filed for bankruptcy each day last month, seem to suggest that talk of an early end to the recession are premature. Debt help organizations also reported a busy first quarter.

One person who is optimistic is Jans Hatzius, chief US economist at Goldman Sachs. Jans said "I am seeing green shoots, not in terms of the current quarter but in terms of the prospects for a quarter or two down the road."

In the US, some sectors are experiencing a surprising upturn, with retail sales suggesting consumer spending grew by 1% in the first quarter.

Further afield, businesses around the globe are reporting that conditions are slightly improved, but are still down on historical benchmarks.

One recent success was in Germany, where over a million consumers have accepted the offer of €2,500 to trade in their old cars for new fuel efficient models. This provided a much needed boost to the ailing German car industry.

However, in terms of output, the first quarter of 2009 will look somewhat uninspiring, with Macroeconomic Advisers tracking a 5.5 annualized rate of decline in the US. Even the boost from low energy prices looks set to fade and tough credit conditions will limit consumer spending in the months ahead.