A √ Recovery?
Things are getting better. A clutch of encouraging numbers this morning confirm what many have been saying for several weeks: the worst of this stage of the economic crisis is over.
Things may even improve quite quickly over the rest of this year. What we don't know is what happens next.
Here's the key nugget from this morning's statistics: the ONS thinks that manufacturing production fell just 0.1% between February and March. That's the smallest fall in more than a year. This comes alongside other encouraging news from the productive side of the economy, including the slight narrowing in Britain's trade gap in March which was also announced today.
It's not time to bring out the brass bands. (The trade figures are particularly unreliable month to month.) But, it is looking more likely that that awful 1.9% estimated fall in GDP in the first three months of the year will be revised upwards slightly when the ONS produces a new estimate next week.
As I noted when that first figure came out, the sheer scale of that decline early in the year makes a sharp improvement over the next few months more likely.
Think about it: if you have stopped production altogether, as many industrial firms have done, there's nowhere to go but up.
Even if you're still producing nothing in the second quarter, that's a recipe for 0.0% growth in the second quarter not a further decline.
Of course, that's the extreme case, but you can see how the sheer pace of de-stocking and layoffs in the past six months limits the scope for further sharp declines.
So, assume things do get better over the next few quarters - maybe dramatically so. What happens next?
That's when things get sticky. Because even the most bullish of real economy bulls, when pushed, have a difficult time explaining where a full throttled, private sector-led recovery is going to come from, especially in the US or UK.
You will be bored of my repeating it but I will do it again, banks and companies may have shed a lot of debt in the past year or so but for consumers, that "deleveraging" has barely got started, especially here in Britain.
Unless something very strange happens, the rise in Britain's personal savings rate in the last few months of 2008 is only the beginning. At a time when the government also has to retrench, it is difficult to see how that amounts to rapid growth.
So what could this recovery look like? It's not a "V". But it's not quite an "L". In the absence of another global financial meltdown, a "W" shaped recession looks a bit less likely as well - the dreaded double-dipper.
That could happen: the world is still a fragile place. But if the banking crisis is over, as Robert Peston has said, there's a search on for the appropriate symbol, and it's left the standard keyboard behind.
Enter the "square root" scenario. Microsoft doesn't do justice to it, but the square root allows for the possibility of a fairly rapid early recovery, with slow or stagnant growth after that.
Or, if you think that's too gloomy, economists from Moody's, the ratings agency, have a less subtle alternative: the "hook". That's a steep downturn followed by a recovery that's neither one thing nor the other.
You might say that economists should have better things to do with their time than trawl their "symbols" menus. But the shape of the recovery is the multi-billion dollar question and it will be some time before we have an answer.