Better times ahead?

Just released weekly new-unemployment claims from the Labor Department show a modest reduction from last week's 16-year high but are still at recessionary levels. 

Durable goods orders have fallen for three straight months.

Personal income increased by 0.3% but consumer spending plunged 1% in October for the fourth straight monthly decline. Consumer spending accounts for 70% of economic activity.

New home sales fell 5.3% during October for an annual level of 433,000 - lowest since January 1991.

But the stock market advanced 17% in the last four days and the 30-year bond was flat during the same period. Bonds rise when traders expect bad times ahead because lower interest rates make the bonds they hold more valuable.  Even though the recent economic news was very bearish, the 30-year bond didn't rise.

Are the markets saying that the economy will improve? Huge Federal bailouts may have increased liquidity to the point where credit will return to reasonable levels. In addition, the dramatic drop in crude oil and gasoline - works as a large tax cut would to the economy.