Glimmers

President Obama pointed to a few "glimmers of hope" in the economy, such as increased lending to small businesses and more refinancing of homes. It's tempting to seize on the unexpected good signs, but there are still plenty of economists predicting even tougher times ahead. There's significant doubt that we've hit bottom.

The key to how bad things will get may be the banks, and the results of the government's "stress tests" that are due by the end of April. The restructuring of the financial sector, including new regulations and new responsibilities for government institutions, we presume is ongoing.

But touting glimmers of hope helps the economy beyond the banks. A paralyzed economy has nowhere to go but down. Stimulus is supposed to stimulate, and people in general have a vested interest in getting things going, especially if their jobs and businesses are threatened. Some of the federal stimulus money starts showing up this month in unemployment and social security checks, and in tax refunds. Infrastructure projects should be numerous by summer.

All of this suggests we may be turning the psychological corner. But another major shock or two--especially if it's a surprise, and not something expected like a GM bankruptcy--could set things back. I don't worry much about the usual agents of doom predicting economic and political collapse within the year. But I do pay attention to economists like Paul Krugman and James Galbraith who fear things are going to get much worse before they get better, with time till the getting better part still in doubt.