Compared with their bond market peers, investors in US equity markets remain notoriously optimistic in their economic outlook. Or so the conventional wisdom goes. Dig a little deeper, though, and the message is a lot less clear than the near doubling of the S&P 500 since its 2002 trough would suggest.

For one thing, shares have lagged behind rapidly expanding earnings. That has left the market as a whole trading at just over 15 times underlying earnings on Standard & Poor’s bottom up estimates for 2007, leading some to conclude that even a few quarters of lacklustre growth need not spoil the party. But the aggregate hides as much as it reveals.