The collapse of confidence resulting from last Friday's bad employment report was overdone, not because the news wasn't that bad, but because expectations had gotten way too rosy. The search for green shoots with green-colored glasses had led to false hopes and denial– a false dawn if you will.
The employment report reminded us that the recession is not over. That does not mean that the recession isn't closer to being over than it was when the monthly employment losses were much larger. Encouraging signs still abound: financial Armageddon has apparently been avoided; financial markets are healing; confidence is off the floor; some leading indicators are rising. And, yes, the monthly employment losses have moderated.
Commentators, tired of the same old gloom and doom, became irrationally exuberant about the end of the recession. If they had been merely "encouraged," the May employment report would not have been such a shocker. Let's not compound our problem now by becoming irrationally discouraged.