The U.S. economy is not really improving. Nor will it for a while.

The stock market and retail sales are up primarily because of all the money the fed is flooding the economy with. The continued low interest rates are fueling home sales, but that's just delaying the drop in value of overvalued real estate. Foreclosures are rising again, and commercial loans are being foreclosed also. Those trends will continue and they are depressing the economy.

Consumption to support a market that would make the current real estate values realistic simply does not exist. Real estate values will continue dropping, but slowly as banks refuse to take reductions in what they are owed because that hurts their bottom line and their capital base.

Employment, however, is still dropping. That drop in employment means that consumption spending based on anything outside government supplied funds does not exist. There is not the slightest hint that the economy is really going to turn around.

As for the stock market, that's a monetary reaction. More money to invest and prices will rise. But again, it's government supplied money. Wait until the government starts reducing the deficit and the fed allows the interest rates to rise. Krugman pointed out recently that Japan has had a struggling market much like ours for the last two decade, and their stock market has also seen some rallies. None stuck, though.

This isn't a cyclical recession will bounce back. This is a recession built on the attempt to run our economy on borrowed money while exporting jobs and making education more expensive for the work force. The real economy has been replaced by a false banking economy since 1970. The term is that our economy has been financialized.

I have no real idea when our economy will begin to recover, but I can remember when Paul Volker created the recession in the early 80's to destroy inflationary expectations, and just getting everyone to realize how big the changes were going to be took him four years. It'll probably take that long for people to get over the idea that the economy is going to "bounce-back" on its own like it "normally" does.

After that, it will take at least a decade of intense rebuilding of the economy and especially of the trained and experienced workforce before we begin to see a real recovery. America hasn't done anything like that since the Depression and the post WW II era.

Japan's experience is quite instructive.