Welcome to the Nike recovery

History teaches us certain things about attitudes to booms and busts. We know both are usually exaggerated at the time. We also know that attitudes often lag reality, especially with busts. The lag factor means people can come their most gloomy when the worst point has already past. A famous example is Bill Clinton's election pledge to fight a recession that had, it was later discovered, already ended.

You could argue this lag has happened in legal services. Several firms have told me recently that their worst trading was way back in October /November. Yet judged by the collective mood, fuelled by a wave of legal job losses, many would have assumed that February/March was the real low point.

Does that mean recovery is upon us? Well, looking at a range of indicators, it's clear the downward spiral of the UK economy has slowed considerably. It is even possible the UK, which only two months ago some pundits were fighting over to see who could come up with the most bearish forecast, has begun once again grinding out (extremely modest) growth.

This brings us to another point about attitudes to the economy - in general, the debate is often oversimplified. That was obvious two months ago when some commentators skipped, without a hint of shame, from talking of the Great Depression to Green Shoots without a beat in between.

Green shoots is a weird debate, dividing as it does the outlook into thumbs-up or thumbs-down. But you first need the economic descent to slow before you get stability, which you need before you get growth. The economy not contracting as fast as it was is plainly a good thing - you can accept that without having to bank on a strong recovery just around the corner. Most likely, that is where we are. Also handy is the banking system getting off life support, business inventories running down and a broad if minor recovery in confidence. Set against that, with a fiscal squeeze ahead of us for the next decade and below average lending for the next couple of years, it's probably going to be a slow recovery. You can argue about V or W-shaped recoveries but I heard someone put it better recently when they talked about a Nike-shaped recession - a very fast and steep contraction followed by a gradual return to growth. That also echoes what you hear from law firms. Almost no-one is saying it has gotten worse over the last couple of months; most think it has either stabilized or even turned up a little. Of course, summer trading will likely be even deader than usual as deal markets sit on their hands until September, but the difference is that now you could actually imagine something happening in September. That doesn't sound as comforting as green shoots but it's a better outlook than we had only until very recently.