Four years into the recession it’s the sort of good news that the Island could use.But Premier Paula Cox’s assertion that the economic recovery is underway has raised more than a few eyebrows.She is sticking to her view, however, with a spokesperson saying that there are “modest signs of growth in the business sector”.At the Bermuda Business Summit on Thursday, Ms Cox informed her audience that the economy was in recovery.“On a positive note, let me start with some good news. The economic recovery has begun,” Premier Cox told an audience of business executives. “Now here’s the bad news — the economic recovery has begun.“As the recovery gets underway, as things start to move once again albeit ever so tentatively, the question has to be ‘what new strategies can we employ that will help strengthen our position while not exposing us to unnecessary risk?’ and ‘Is there now a bias to action that wasn’t present before?’“In other words ‘What are we going to start doing and what are we going to stop doing?’”The Premier did not explain why she thought the economy was in recovery nor was the speech clear on how a recovering economy was good and bad newsRonnie Viera, head of the Chamber of Commerce, was at the meeting. We asked him whether the Chamber agreed with the Premier’s assessment.“I heard the Premier’s statement and, quite frankly, was surprised,” said Mr Viera in an e-mail to The Royal Gazette. “Several members of the Board were also at the meeting and it is fair to say that we do not see any signs of a recovery.“Yes, some of the initiatives presented at the meeting were positive and offer some hope but we still have members closing their doors, people being made redundant, retail is still struggling and the real estate market has not changed materially.“In addition, the latest Tourism statistics are concerning. So I am not aware of any economic indicators currently showing that a recovery has begun.”We asked Ms Cox what indicators suggested to her that the economic recovery had begun.A response was sent on her behalf which appeared to say that her comments should be placed in context (see response in full in the sidebar).But the spokesperson did point to positive growth in the number of insurer registrations for the second quarter of 2012.“Recovery signs indicate that new business is coming into the Island and there are modest signs of growth in the business sector,” the spokesperson said.“The bottom line is that the Premier indicated there is still a ways to go and just shoots of growth are beginning to appear that are being signalled.“For example in the second quarter of 2012, Bermuda saw a three fold increase in the number of insurer registrations over those in the first quarter.“This growth was mainly driven by the increase in registrations of Special Purpose Insurers (SPIs). SPIs have proved particularly popular as vehicles for issuing catastrophe bonds (CAT bonds).”The spokesperson said that the trend is expected to continue because market conditions for CAT bonds are favourable.The One Bermuda Alliance did not respond to a request for comment.“Optimism is important but reality is telling a different story,” said Kim Swan interim leader of the United Bermuda Party.“We (UBP) understand the need for optimism in the midst of this prolonged recession that has gripped Bermuda for the past four years, but the optimism must be tempered with reality.”Mr Swan added that the Premier should not be making such claims without supporting them with indicators.“The reality throughout our island communities is dire concern as Bermudians are understandably growing more nervous, particularly with the recent closures of White’s Supermarkets in Warwick and Southside and a host of other job casualties there is good reason for apprehension circulating throughout Bermuda.”Mr Swan said: “If the recovery has begun it would be beneficial to show the people the indicators or signs.”Craig Simmons, a lecturer in economics at the Bermuda College, doesn’t see the signs.“Most economic indicators do not suggest a recovery is underway,” he said.“The retail sales index (RSI), a proxy for consumer spending, the largest single component of national spending (GDP), hasn’t grown by more than the rate of inflation since April 2008,” he said.“Having said that, the building materials component of the RSI has shown strong growth over the last nine months, but this is not enough spending to signal a recovery.“At a minimum, four consecutive months of better than three percent growth would be a strong signal that a recovery is underway.”The balance of payments “remains muted” he added, while the money being pumped into the economy through salaries earned in the international business sector are still significantly below pre-recession years, having dropped about 20 percent between 2008 and 2011.He added: “The quarterly surplus between spending and earnings should be around $250 million. The most recent figures show a surplus of $145 million.“Two consecutive quarters of greater than $200 million surpluses would signal a reversal of fortunes.”Further, Mr Simmons noted, the banking sector was still vulnerable. “Non-performing loans as a percentage of bank capital has climbed to over a quarter (26.7 percent), up from 17.2 percent a year earlier.“Bank deposits are also falling, suggesting that people are dipping into their savings to stay above water.“Fortunately, the banking sector is not repeating the mistake it made during the last recession in the early 1990s.“It has not cut back on lending to the same degree, but banks are not providing the kind of stimulus that is needed to boost both consumer and business spending.”As for Cup Match spending an increase of one or two percent in the amount of money in circulation is “hardly a sign of an economy in recovery,” Mr Simmons added.“A question remains, is the worst of the recession behind us? I think not.”This is not the first time the Premier has declared an economic turnaround.Ms Cox’s use of the phrase “post-recessionary climate” in the 2010 Throne Speech was pounced upon by the United Bermuda Party, then the Official Opposition.“First, we see it as strangely detached from local realities,” said Mr Swan in his Reply. “Bermuda is not in a post-recessionary climate.“On the contrary, Mr Speaker, Bermuda is still in recession. The Government may not know it, but people do.”For Martha Dismont director of The Family Center Government’s current bout of optimism is “heartening”.“It is hoped that what they are seeing translates to that which will actually strengthen the vulnerable in our society.“From our perspective, we need to see Bermuda’s most valuable resource — its people — have job opportunities, support for workforce skill development and ‘high cost of living’ relief.“In order to ‘serve up a good product’, we need to strengthen our people to deliver a good product.”