New York Times

I was reminded this week of a primary premise in evolutionary psychology: we’re genetically programmed to emphasize information about danger and minimize information about pleasure.

This is a gross simplification of interesting science, but is a useful overlay to the confluence of economic statistics and contradictory commentary in recent weeks.

In today’s New York Times, the pragmatic Floyd Norris makes the argument that data is pointing to a strong economic recovery, even while conventional wisdom suggests that we’re mired in a “new normal” of stagnant performance.

Norris has staked out a niche is letting numbers do his talking. In the column, he points to several statistical developments that suggest many experts are downplaying the positive. One example he cites is the March employment report.

Employment is a lagging indicator. Employers can be slow to cut back when business turns down, and slow to rehire when it picks up. It stands to reason that when employers cut back sharply — as happened in this cycle — they will have to rehire faster than if they had been slow to fire, as was true in the two previous downturns.

I looked back at the recoveries after seven recessions from 1950 through 1982 and found that, on average, such a strong three-month performance of the household survey, defined as a gain of at least 0.8 percent in the total number of existing jobs, came seven months after the recession had ended, with a range of two to 13 months.

If the 2007-9 recession ended in August, as the index of coincident indicators would seem to indicate, the lag this time will have been seven months.

Mark Perry of Carpe Diem presented the trending of initial jobless claims since 1974 in a recent post. The chart is one point in an ongoing argument that Perry has been building that we’re experiencing a real recovery in the economy.

Perry consolidates his 10 primary points in a post on The Enterprise Blog. He characterizes this as a period of “solid and sustained economic expansion.”

The positive proof points are wide-ranging: manufacturing activity up, restaurant activity rebounding, manufacturing accelerating, job growth increasing. (Perry points out that very few people have reported on the fact that private-sector employment increased by 1.1 million jobs in the first three months of 2010.)

The consensus of most economists is that the Great Recession ended sometime around June 2009. In that case, we are now nine months into an economic recovery, and the economic data and reports summarized here all point to a recovery that is real and sustainable. While this rebound may not be quite as strong as other post-recession expansions of the past by some measures, there is at least now unmistakable evidence that the recession ended last year, the U.S. and world economies and financial markets have recovered and are gaining momentum almost daily, and there are no signs on the economic horizon of a double-dip recession.

The recovering economy was a theme in a conversation I had with one of my key executives last week.

“Don’t expect your customers to recognize that the market is turning,” I said. “They’ve been burned by the dramatic drop in the market, and won’t believe any improvement is going to last until it’s well underway.”

Acknowledging this lag in human perception is an important part of managing your own focus and energy. In this case, our observation translates into a specific sales approach: Be positive, emphasize the benefit of your service, and keep encouraging customers to regain the hope that accompanies investments in marketing, because there is a shift in the way their prospects and customers are seeing the world.

From the overall perspective of the economy, it’s difficult for people to imagine a strong recovery that doesn’t incorporate some of the activity that drove the housing bubble — high levels of construction and resale home activity.

The economic recovery is likely going to incorporate a “new normal in real estate” and a continuing correction in personal and corporate balance sheets. What is clear is that the overall economy has sufficient scale to mitigate the drag of these trends.

While the crashing of the housing bubble was highly disruptive, in the end it has only resulted in the elimination of about 2.3 million jobs. As households re-form and housing inventories gets worked off, new construction will return to the new homes and multi-family markets. The characteristics of this construction will be different: few high-volume (and high margin) tract developments and high-end rental and condominium buildings, and more custom and mid-range projects.

This is how it feels to recover from a bad blow. You need a moment to believe that you’re not about to get hit again, and when you go about your business, you keep looking over your shoulder, thinking that something bad is going to happen again.

Like my mom said, dust yourself off and get moving.

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