In an April posting in this blog, I suggested that the early beginnings of an economic turnaround were coming into view. At that time, such indicators as a slight resurgence in the housing market, improvements in the credit market, a 25% gain in the S&P 500 stock index, and encouraging words from the federal government inspired to me to say that it was time to entertain the idea of putting the words “confidence” and “economy” in the same sentence.

Well, since my pronouncement, other evidence has been building that the economy may have hit or may be hitting bottom, and will be on its way back up, however slowly. In recent weeks, several big Wall Street financial firms have reported multi-billion dollar profits and have repaid their government bailouts. Unemployment levels, while still rising, have grown less than expected. Last week, the Federal Reserve said it would hold interest rates steady. And on Friday, it was reported that the 27-country European economy shrank only 0.3% in the three months ended June 30, compared to a 2.5% decline in the first quarter.

The U.S. economy, meanwhile, declined 1% in the second quarter, according to a New York Times report. And even though its effects may be debatable, the Obama Administration’s nearly $800 billion stimulus package is only just getting started. The vast majority of funds from this package have yet to be injected into the economy, holding out the potential for positive effects for the remainder of this year and into 2010.

So are we on our way out of the downturn? I’m more optimistic now than I was even in April. And I’ll even venture a prediction: If the Dow breaks 10,000 sometime after Labor Day and stays above that level, feelings of confidence, however tentative they may be now, will start to jell. And then the crazy human psychology that drives markets may just have turned the page.