The 1993 movie Groundhog Day depicts actor Bill Murray as a weather reporter doomed to relive the same daily routine, over and over again, while everyone else in the movie thinks the day is fresh and new.

It’s the same with economic history: The business cycle is predictable, but it always seems to come as a surprise. Economic historians are the Bill Murrays of the world: They’ve seen it all before. So, what better date than February 2nd to remember that old French adage about the sameness of change?

“The more things change, the more they stay the same.” 

This recovery is “different,” the headlines tell us, but it’s really quite similar to the 12 postwar recoveries that came before it. The professional worrying class has been warning about a “double dip” recession for months, but that only happened once last century. Job growth is lagging, but that is also normal.

This recovery will likely run 4-5 years – the postwar norm – but it will need to climb a never-ending wall of worry during the second half of the recovery (i.e., 2011 to 2013). This time around, the first half of the recovery was slower than normal, so skeptics tell us “this time is different.”  But slow growth implies that the second half can be stronger, as sort of a “make-up” spurt. So, let’s study two statistics: GDP and jobs.

GDP: A Second Wind (“Comeback” Recovery) Has Already Begun

We are already seeing the start of a “second wind” in the current recovery. GDP growth rates slipped to near zero a year ago, when the first-quarter GDP rate dipped to +0.4%. That was very depressing news. In fact, all the major market indexes peaked on Friday, April 29, the day the first “flash” estimate of first-quarter GDP figure was released. (The ‘flash” figure was +1.8%, later revised down to just +0.4%.)

Then, throughout the summer of 2011, we saw unprecedented market volatility as investors debated the “double dip” question: Are we headed into another recession so soon after the recent recovery began?

No, we’re not. Here’s the basic data we need to consider: We saw strong and consistent 3.9% growth for three quarters, then three quarters of falling growth rates, followed by three recent quarters of rising growth rates. Next stop: 3% or more growth during 2012 and into at least 2013, perhaps later.

 What could lead the economy back to 3.9% growth in its “second wind” phase?  Two main engines:

 The Two Engines of Recovery – Consumers and Business

Consumer spending and confidenceare vital to GDP growth since 70% of GDP growth is driven by consumer spending. In 2011, retail sales rose 8.4%, while auto sales rose 10.3%, totaling 12.8 million units, accelerating to a 13.5 million annual rate in the fourth quarter. Those aren’t recessionary numbers.

The Federal Reserve also announced that November consumer credit surged 9.9%, the fastest monthly increase in 10 years – ever since the post-9/11 recovery month of November 2001. Credit card debt rose 8.5%, the biggest monthly rise since 2008, while non-revolving debt (like auto loans) rose 10.7%.

Consumer moods have also improved. The University of Michigan’s Consumer Sentiment Index (CSI) hit a 33-month low of 55.7 in August, then shot up to 74.0 in January. The expectations index rose from 47.4 last August to 68.4 in January, while the “present situation” component rose to 82.6 (an 11-month high).

Business saleswere also up in 16 of the last 17 months. Manufacturing & Trade Sales (MTS) rose 9.6% over the last 12 reporting months. Corporate earnings rose by double digits throughout 2011. In the fourth quarter, with over 200 of the S&P 500 companies reporting, earnings are 9.4% above a year ago, despite ever-tougher year-over-year comparisons.

Business sentiment is also turning up. Last month, the National Federation of Independent Business reported that small-business optimism rose to 93.8 in December, up from 92.0 in November. That index has now risen 5.7 points in the last four months. Another good sign is that the Fed’s latest Beige Book survey reported that economic conditions improved in all 12 Fed districts in the last six weeks of 2011.

Skeptics and politicians say that may be good for business “but what about JOBS?”

Jobs are ALWAYS a Lagging Indicator

Groundhog Day strikes again!  Jobs are ALWAYS a lagging indicator. It takes many months following the end of a recession for employers to feel comfortable enough to expand their payroll in significant numbers. The lag time is generally 6-12 months. This time around, the jobless rate peaked a little sooner than normal, five months after the recession ended. But in the previous two recessions of 1990-91 and 2001, we heard about a “jobless recovery” for more than a year (15-19 months) after the recovery began:

You wouldn’t know it from the sad headlines that appear almost daily, but America added a net 1,635,000 jobs last year, and the rate of new hiring is escalating: 782,000 jobs were added in the first half of 2011 and 853,000 in the second, including over 200,000 in December, when the unemployment rate reached a three-year low of 8.5%. In addition, the four-week average of new weekly jobless claims has been below 400,000 for 11 weeks now. Economist Ed Yardeni predicts a drop below 300,000 within 12-18 months.

Companies rely on profits to expand employment. So far, employers have boosted productivity – getting more done with fewer people – but there is not much room left for boosting profits based on productivity alone. Businesses must eventually expand payrolls, as long as the economy continues in its recovery.

Sadly, politics enter into this mix. Due to the rise of President Obama’s controversial healthcare mandates and new regulations, businesses have been uncertain about the costs of hiring or the stability of the current recovery. But with the promise of “change” (or at least more gridlock), businesses will hire more.

This business recovery will eventually exhaust itself and retreat into an inevitable recession, perhaps in 2014. That’s merely the Groundhog Day economic cycle in action. But first, enjoy 2012’s “second wind!”