It’s a fundamental lesson in economics and a lesson that all consumers and investors should understand. Even if we are in the midst of a healthy recovery it will not be a straight line up. Rather an economic recovery always has plenty of rough spots in it where it may still feel like we are in a recession. Don’t be alarmed the first time the stock market has a pretty strong move to the downside or the first time some of the economic numbers don’t show a very optimistic picture of the economy. An economic recovery is typically full of times where consumers and analysts alike question whether the recovery is real or not.

The recession we have been in was a very deep recession that will take a long time to recover from. The stock market has certainly priced in the fact that a recovery is on its way, but it may not have factored in the economic bumps in the road that are sure to come. Since September and October are typically two of the worst months of the year for the stock market, an investor should probably tread carefully with the stock market at these levels. There will certainly be some pullbacks where you can find stocks at a better price.

It’s fine to be optimistic about the outlook of the economy for your country and the world as a whole, but it is definitely wise to be realistic about the recovery. When there has been such a powerful global recession where so many have lost their jobs and the strength of the consumer has been compromised so badly, you must realize that it will take time to heal those wounds. The recovery may well be taking place now, but don’t expect a straight line up for the economy or the stock market!

While any kind of economic rebound appears to be at least several months away there is never any harm at looking into the future. In fact, if you can predict what areas will do the best when the economy does rebound, you can do yourself a lot of good both from an investing standpoint as well a career standpoint.  During an economic recovery there are always sectors that lead the move, and it is a great idea to try to do your due diligence and decide which you believe may fit that criteria, even though it may take time to come to fruition.

The typical businesses that thrive as the economy rebounds are manufacturing and construction companies that begin to bounce back nicely because economic activity is picking up once again. In addition to those, retail names generally do well when the economy recovers because of the increase in consumer confidence and spending. Cyclical names that are out of favor generally come back into favor quite quickly during an economic rebound.

Will the economic rebound that comes after this major recession look like a normal rebound? That really is the million dollar question. There are some factors which may delay the recovery in some groups that typically recover quickly. For example, the banking industry is generally one of the first to move higher, but it may be hard pressed to bounce back right away after the debacle of the credit crisis. On the other side of this there may be areas that are bigger winners than normal. One possible area that could do very well in the recover is alternative energy companies. Even manufacturing and industrial companies that are in front of their peers in “going green” are liable to bounce quicker. I truly believe that the move toward a greener world is not a short-term blip this time, but rather a real and serious effort that can be profitable for companies.

The credit crisis began to surface late in 2007 when the Dow was trading near 14,000. The Dow now sits below 7,000 and the economy is tumbling lower and lower each and every month. I still remember quite clearly the economists and the talking heads on television saying that this recession would likely be a short lived recession and talking of  economic recovery taking place in early 2009. Fast forward to early 2009 and not only has an economic recovery not taken place, the economy is in the worst shape it has been in yet. The housing industry started it all, but it has become spread across the entire economy now.

Lately many major economists, including the Federal Reserve itself, have lowered their economic projections for 2009 as well as future years. Ben Bernanke has said that he believes the unemployment rate will continue higher for quite some time and remain high through at least 2011. He also stated that he believes an economic recovery in 2010 is still possible, but only if are ailing banks are stabilized. The problem with that is those same banks were ailing badly more than six months ago now, and it seems very little has changed since that time. At this point it is hard to tell if progress of any kind is being made in the banking industry.

Even though the labor market continues to worsen and expectations are that it will take years to recover and the consumer confidence rate is at record lows some still continue to believe that 2010 will be a strong recovery year. I find it possible that 2010 will be a year where a turnaround could begin, but it will take a long time and it should be a very slow recovery. Remember that as the economy worsens these estimates of when an economic recovery will take place are likely to keep getting farther and farther out.

I wanted to take a look at the more positive side of things today, which is certainly tough to do in the current economic environment, but it is important to keep some perspective. The fact is our economy is in terrible shape and there is no real end in sight, but that does not mean that this economy cannot recover. In fact the chances of a strong recovery by the American economy at some point are very high.

I think as the economy and the overall market goes lower and lower it is easy to go along with the naysayers and those who believe that the American economy has been forever tainted and it will never again see its glory days. The fact of the matter is, this isn’t just an American problem it is a worldwide problem. The other thing that people need to remember is that recessions do happen, and it had been quite some time since the American economy had a severe recession. Even if the recession turns into something that goes on for quite some time, it doesn’t mean that America has lost all of its competitive advantages.

There are quite a few analysts who are hinting that this could be the beginning of the end of America’s reign as a global power from an economic standpoint. I think to believe such things is quite premature and rather short-sighted. Clearly right now America’s position is weakened, but this has happened before and it will happen again. America can still be an engine of growth and a market leader around the world. The American economy can once again start humming along and helping many individuals live a very comfortable lifestyle. While I wouldn’t want to bet on the economy turning around anytime soon, I also wouldn’t want to be on the side who thinks this economy is on a one way street and will never turn things around.

The old saying that patience is a virtue is one that is commonly used, but it couldn’t possibly be more true in the economy and the market that we are now faced with. Over the next few weeks and as we get into the new year you will hear many different analysts trying to pinpoint exactly when things will get better for the economy and the stock market. I strongly urge you to take their calls of a bottom in the economy or the market with a grain of salt, because no one truly knows just how bad it could get.

When uncertainty reaches the levels it is currently at, there simply isn’t a quick solution to make things better. No matter what is done to help stimulate our economy or the marketplace it will take quite some time to work its way into the economic numbers. As more and more people lose their jobs at a faster rate, it is highly unlikely consumers will be becoming any more optimistic anytime soon.

You’ll hear many people saying that certainly our economy will turn around and the market will as well, which I believe is definitely the truth, but that doesn’t necessarily mean it will be anytime soon. These things don’t go away quickly, and you are kidding yourself if you think they will.

The point is you are going to have to be very patient with this economy and the stock market in the coming months and possibly even years. A recovery will definitely come, but probably not as fast as many predict and certainly not as fast as we would like. The economic data doesn’t lie, and things are simply getting worse instead of better. Your guess is as good as mine for when that trend will end, but be prepared to have your patience tested!