It is encouraging that we have begun to see some evidence of stronger demand for homes and consumer goods and services. In the housing sector, sales of new and existing homes have moved up appreciably over the course of this year, and prices have firmed a bit. Meanwhile, the inventory of unsold new homes has been shrinking.
Eventually, some shock to the system exposes the fragility, and the shock is often followed by fear and overreaction before a new equilibrium is established. In these circumstances, financial markets often suffer from episodes of widespread illiquidity amid a rise in risk aversion among investors.