Is double-dipping the new green shoots?
We had a few weeks in the thrall of green shoots. Now the phrase de jour is "double-dip".
I doubt that the real economic situation has changed as dramatically as the headlines. But it's right to worry about the recovery petering out.
As I discussed with Evan Davis on the Today programme this morning, we are back from the brink. That doesn't mean the economy is about to scale new heights.
This morning's CIPS/Markit Purchasing Managers' Index for June tells the story. It shows the first increase in manufacturing production since March 2008.
Across the board, the index looks healthier than it did in the first few months of the year.
And yet, employment is still falling at a rapid rate, and the headline index is still below the "neutral" 50% mark for the 15th month in a row.
As yesterday's GDP revisions reminded us, the key weaknesses hanging over the economy have not gone away. We've just been averting our gaze.
Consider the financial system. Mervyn King and others have long warned that the embattled state of bank balance sheets could make for an unusually slow pick-up in lending, and as a result a painfully slow recovery.
That concern has not gone away. Far from it. Yesterday. Bank of England figures yesterday showed no rise at all in May in net lending secured on property, for the first since those records began in 1933.
We also had encouraging house price figures from Nationwide - the third monthly rise in four months. But even many estate agents say they doubt the improvement will last. The number of houses actually changing hands at these prices is tiny.
The same is true of the household sector. We now know that the household saving rate fell from 4% to 3% of their income in the first quarter, perhaps because wages and salaries fell 2% in the same period.
Yet we know that people are likely to want to save more in the future, to repair their own balance sheets - a lot more than 3% of their income, if history is any guide.
If their income isn't going up, the only way that happens is through lower spending.
Think through the implications of that for businesses. Assume a company was operating at 100% capacity a year ago. Then that fell to 60-70% during the winter (of course a lot of industries suffered even greater falls than that).
Perhaps they are back to 80% now. But if demand stays at that level, it doesn't matter that things are better than they were. They could still go out of business.
As I pointed out on the Ten O'Clock News last night, we had a similar 2.4% drop in GDP in the autumn of 1979. Then the economy bounced back, to grow by 1%, only to tip into recession for the whole of 1980.
I don't see that happening today, for a bunch of reasons - not least, the fact that there is already so much policy stimulus in place to prevent it. For what it's worth, I still think a square root recovery (see previous post) is more likely. But, as we keep being reminded, we can't take anything about this recovery for granted.