Dan's Telegraph blog carries a couple of graphs that show why Dan is distinctly unconvinced by the 'it's all over' headlines in the press about the recession. And there are indeed parallels between this little breathing space and the big dip that followed the minor recovery of 1930.
"After the 1929 crash ... the stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30% below the peak of September 1929. Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year.By mid-1930, interest rates had dropped to low levels, but expected deflation and the reluctance of people to add new debt by borrowing, meant that consumer spending and investment were depressed. In May 1930, automobile sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930; but then a deflationary spiral started in 1931."
Austrian school economists blame government economic intervention for delaying the adjustment of the market, and indeed making things worse and recovery more difficult.
Is Dan right? Is the worst yet to come? Or was this just another bog-standard recession, a normal business cycle dip, with the added flavour of a banking crisis? We'll have to wait and see, I guess.