This completely fits in with my personal psychological theories (somewhat educated due to college degrees).
My theory is that animals (and hence humans) have a certain psychological rhythm, largely dictated from millions of years of seasonal changes, that impacts larger trends. Most recessions tend to last roughly a seasonal change. Even the Great Depression is better understood as a series of recessions/recoveries over a multi-seasonal time period. It just so happened the overall trend was down – think of it as a few years in a row when you get frost and can’t harvest, or the local wildlife becomes diseased, or whatever. Point is, there’s a seasonal, semi-sinusoidal wave to things.
So WTF does this have to do with this post?
I think most people are “tired” of things being bad. They’ve reached their saturation level, and are ready for things to turn back up. All it’ll take is a few quarters of things really starting to improve, and people will say “hey – things are getting better!”
It actually doesn’t matter if the “economic fundamentals” support it. Everything boils down to emotional states, which are THE leading factor. Despite the fact QE will destroy the future of our country, The Bernanke realizes inflating a big stock market rally will help people get excited again.
