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Stock-Market Sages Say Worst Is to Come

The stock market heaved a sigh of relief last week. Gains were widespread. The broad-based Wilshire 5000 is up 39% percent, or $3.2 trillion, from the market low of March 9. (The benchmark S&P 500 Index is down today, with Bank of America (BAC - Get Report), American International Group (AIG - Get Report) and UnitedHealth Group (UNH - Get Report) falling more than 3%.)

There's a growing consensus that the worst of the economic news is behind us, and that a rebound in the economy can't be far behind the rebound in the stock market. File all of that under the heading "everything is relative."

The unemployment numbers were bad. But not as bad as expected. (Tell that to the 539,000 people who lost jobs in April.)

The banks need to raise "only" $75 billion in capital. (Tell that to the taxpayers who have already come up with billions in Troubled Asset Relief Program money, and to the existing shareholders whose stakes will be further diluted.)

Consumer confidence has rebounded from its all-time low at 37.7 in January, to 39.2 in April. (Tell that to those who confidently purchased homes or stocks back in June 2001, when the index stood at an all-time high of 118.9.)

Recent reports show that home prices fell "only" 19.6% last month. (Tell that to a homeowner trying to refinance a mortgage that is larger than the value of the house.)

When it comes to the economy, everything is relative. We are relatively a lot worse off than we were a year ago. But some of the statistics are relatively better than they were a couple of months ago, when so many people feared another Depression.

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