Calm after the storm, or eye of the hurricane?

Of the dozens of economic reports we receive each month, many, particularly consumer and business confidence, were hitting lows not seen since the 1991 recession.  Many economists claim that the US economy is in, or about to enter recession, and certainly the general public feels that way.  Yet, compared to the mild recessions of 2001 and 1991, and certainly the major recession of 1982, we wonder if people are over-reacting.  A quick comparison between current conditions and the trough values of previous recessions shows:

The obvious notable exception between this and previous slow-downs is the remarkable fall in home prices.  Reliable data from 1982 is not available, but generally speaking home prices were flat in that time frame.  If we create an "Ultra-Misery Index" of the unemployment rate plus the inflation rate minus the decline in home prices, we quickly understand why the American consumer is so disconsolate.

US stocks gained in April and May, with the S&P 500 up 5% and the NASDAQ up 9.5%.  Energy stocks rallied the most, at one point up 20% on the quarter and even now remain up 14.8% on the quarter and up 6.5% on the year, along with materials.  Financials gave up recent gains following the March 17th, low, down 15.5% on the year and up just 12.3% over the last 5 years (that's total, not annualized) versus a gain of 251.8% in energy stocks and 57.1% in the S&P 500.  Remarkably, the simple price appreciation of the S&P 500 over the last 10 years has averaged 0.3%/year.  Include reinvested dividends and the total return of the S&P 500 rises to 1.8%/year (i.e. less than the return on CD's over that time frame.