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Economy may be reviving

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After nine months of economic recession, the financial system appears to be reviving, even though much of the assistance planned by the Obama administration has yet to be implemented.

According to The Washington Post, more than the actions taken by the government, some occurring under the public’s radar, a deepening confidence from financial markets is behind recent optimism. The confidence seems to stem from a belief that the government is prepared to take aggressive action, a message that administration officials have worked hard to disseminate.

Beginning in May, major banks have raised or have committed to raising $56 billion in private capital, which Federal Reserve Chairman Ben S. Bernanke has said would indicate a recovery in the financial system. Since its low on March 9, the S&P 500 is up 34 percent, and one measure of stock market volatility recently hit its lowest level since the financial crisis worsened last September.

These positive indicators are counterbalanced by concern that unemployment will likely remain high through 2011 and possibly beyond, consumers will continue to curtail spending and businesses will continue to founder under a glut of investments made during the boom years.

Said Anil Kashyap, an economist at the University of Chicago, “The feeling is that for now we’ve avoided the Great Depression. But the real economy is still in pretty bad shape.”

Although the government’s plans to help the economy, which include support for business lending, aid to businesses and individuals facing foreclosure and a program to buy troubled bank assets, have yet to be implemented on a grand scale, economists says there is a sense that the government is attacking the crisis from all angles.

“They’re doing a whole bunch of things in a lot of different markets to provide support,” said Desmond Lachman of the American Enterprise Institute, a Washington think tank. “And markets look forward and, to some degree, improve in anticipation of measures that are to come.”

“A huge part of getting out of this crisis is about confidence,” said Treasury Secretary Timothy Geithner. “And it’s the impressions, the impacts, not just by the quality of policies themselves, but by the sense of action by the government . . . that’s critically important to confidence.”