The writing is on the wall. It’s still indecipherable, but it seems to be getting clearer.

Or is it?

President Obama thinks it is, saying recently there are “glimmers of hope” for the long-ailing U.S. economy, while at the same time urging patience.

Obama’s top economic advisor, Larry Summers, is also cautiously optimistic, predicting an end to the economic “free fall” perhaps by summer.

Then there’s Federal Reserve Chairman Ben Bernanke, who last week pointed to signs that the “sharp decline” in the economy was slowing.

In other words, the wounds haven’t healed yet, they just aren’t bleeding as much.

So which wounds are healing the fastest?

The stock market has rallied. The broad S&P 500 index has climbed nearly 30% since hitting its [apparent] bear market low on March 9.

Wells Fargo (WFC: 18.54, 1.45, 8.48%), JPMorgan (JPM: 31.95, 2.2, 7.39%) and Citigroup (C: 3.25, 0.3, 10.17%) have all reported first quarter earnings that seemed to indicate the worst may be over for the decimated financial sector.

Consumer confidence jumped in April to its highest level since before iconic investment bank Lehman Brothers collapsed into bankruptcy last September.

Not so fast, says Robert Dye, senior economist at PNC Financial Services Group.

“I do think we’re seeing some interesting signals, but nothing to indicate an imminent rebound,” he said.

Rather, the disparate signs of positive economic activity are “signals of a changing economy,” according to Dye.

“It looks like we’re coming out of a period of freefall. We’ve gone from a depression back into a recession,” he said.
While the economy appears to be transitioning from economic freefall toward stability, Dye said the U.S is still “many months away” from any kind of a sustained recovery.

Dye noted that seeming lack of coherence to the early signs of recovery — a rallying stock market, rising money supplies, easing of global credit spreads — is to be expected following a dramatic downturn, one that’s been compared in scale to the Great Depression of the 1930s.

“That’s exactly what you’d expect to see in a transitioning economy,” he said. “Not everything turns on one dime.”
The key element missing from the recovery so far is any sign of a bottom to the downdraft in labor markets.

“We’re till losing 600,000 to 700,000 jobs per month,” he said. “We don’t see any definitive signs of a correction in that area yet, and that is a fundamental drag.”

Overall, Dye warned against reading too much into anyone’s optimism.

“These are all mixed signal and it’s very easy to pick and choose depending on what your agenda is. It’s a challenging environment in which to interpret the direction of the economy,” he said.