Is the economy on the up?

I was talking to a former colleague of mine who now works for an insolvency practice about the current state of our economy and when she felt it would start to recover.  Normally (as I have been informed) a recession takes the form of 'V' shape, when the economy is contracting is depicted as a downhill slope and the steep slope is a sign of economic recovery.

However it has been suggested that this current climate takes the form of an irregular 'W', so where are we now you ask?  Apparently approaching the tip the of centre point, housing process are starting to increase as are sales, however and this is important, unemployment is still rising and quickly approaching the 3 million mark…..not good, to say the least.

So why a 'W'?  well there are many suggestions, and one that I seem to hear more regularly than most, some employers are concerned that they cannot meet the costs of redundancy and are waiting for business to increase (which it has started to do so) before committing to any further expenditure.  This is now starting to happen so regardless of the positive signs in the housing market, while unemployment levels increase the economy will not be able to stabilise itself and will start to contract again as consumer spending decreases and people fall into arrears with mortgages etc as they no longer have a regular income to cover their monthly overheads. Although this will not be anywhere near as serious as what we have already been through it does tell it that economy as it stands is in a very fragile state.

So when will the economy return to normal?  Well firstly what is normal?  The over inflated prices of 2007 and the ease of which credit was issued?  It is unlikely that credit will be dished out with disregard for a very long time.  With regards to housing market, experts predict that prices will not come close to that of its 2007 peak until around 2013, but really who knows, these were the same experts who said that the 'credit crunch' would never happen!