The following is a rush transcript of the April 12, 2009, edition of "FOX News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: What you're starting to see is glimmers of hope across the economy.

(END VIDEO CLIP)

CHRIS WALLACE, HOST: That was President Obama noting some good news, and here are numbers to back up that cautious optimism.

The Dow Jones ended the week up more than 23 percent from its low in early March. New claims for unemployment benefits dropped by 20,000. And the number of people considering a new home purchase jumped last month after hitting an all-time low in February.

So where are we in the recession? For answers, we turn to our colleagues from the FOX Business Network, Liz Claman and Jenna Lee.

So, Liz, how much weight do we give — how much weight do you give to these glimmers of hope?

LIZ CLAMAN, FOX BUSINESS NETWORK: Well, he didn't exactly oversell it, which is a good thing, Chris, because if he did, I think that that would be a little disingenuous.

When you talk about these glimmers of hope — you hear this term a lot — green shoots poking themselves up through the ugly mud that we've been mired in over the past couple of months — but clearly, I think that you can give just slightly a bit more credence to this, but you've got to remember that we still have major problems.

We've got a constrained consumer. We've got massive amounts of really, really toxic bad loans on balance sheets of banks. And there are other problems still yet to come. So right now, that's what it is, just a glimmer or a green shoot.

WALLACE: Jenna, let me follow up. I mean, your sense of what these numbers tell us about where we are in this recession and how soon we may begin to see a recovery.

JENNA LEE, FOX BUSINESS NETWORK: Well, sure, Chris. Economists that were surveyed by the Wall Street Journal actually predict the end of a recession to come by September of this year. And that's better than when the same survey was done just a couple months ago, so we are seeing more optimism about when the recession will end.

But to Liz's point about a constrained consumer, we still have trouble in the job market. We still have trouble in the housing market. And just for an example, we don't expect to see any type of recovery in the job market until the first or second half of next year.

So you still have a lot of consumers feeling nervous and feeling anxiety. That affects consumer spending, and we know consumer spending really kind of propels economic activity by about 70 percent. All of that economic activity — two-thirds of it, actually, is tied back to consumer spending.

The consumer is still very important and still under pressure.

WALLACE: Let's turn to the markets, Liz. As we mentioned, the Dow Jones is up almost a quarter in the last five weeks, and let's put up some numbers. The market closed at 6,547 on March 9th. This week it closed at 8,083.

Liz, what's the prevailing wisdom, to use a phrase that may be an oxymoron, on Wall Street? Is there concern that this is a bear rally, a rally in what is still a bear market, or do people feel that there really may be a turnaround in the — on Wall Street?

CLAMAN: Well, I think that if you feel that there's a real turnaround on Wall Street, you are sorely misguided, Chris. If you look back to the Depression, we know that while we saw the crash of 1929, it wasn't until 1932 or '33 that we actually bottomed out in the market.

So people have to be careful that they're not tricked by this. We got so much good will and good feeling when Wells Fargo came out this week and said that they had made money and that they were feeling a lot better about the situation.

I mean, I'm not buying it, Chris. I'm sorry. I do believe that we still have about $4.7 trillion in really big problems as far as loans are concerned, and these aren't even the actual toxic loans that we've been talking about with the government.

So I think that you can't be tricked or falsely pulled into something like this because of that consumer. It all comes back to the consumer, who, in the past, Chris, was able to pull money out of his or her home equity lines of credit, or of course the credit cards. That's all gone. That type of credit isn't being extended right now, plus real wages aren't rising at this point.

So you've got a very constrained consumer who isn't spending. That's going to affect companies who sell products to that consumer. Their earnings won't do so well. There will be some downward surprises. And the market will continue to fall.

It's going to take a while. I mean, far be it for me to question 100 economists that the Wall Street Journal talks to, but it's going to be at least another year before we're out of this, at least for the time being.

WALLACE: Jenna, your sense on Wall Street — are the smart money guys looking for buying opportunities at this point, or are they still sitting on the sidelines?

LEE: From investors that I'm speaking to, Chris, they're definitely looking for opportunities. There's still a very nimble investor that is looking to play this market, not the same type of buy and hold strategies.

That's when you would invest in a stock and you decide that you're going to keep it for a long time. A lot of investors are playing this market and trying to ride the wave here.

But to Liz's point, I'm hearing more and more about this idea of a double bottom or the fact that we could kind of emerge or shake off this recession only to find ourselves right back in it in a year's time or two years' time. So there still is a lot of pessimism from the side of investors.

And again, when we see the — for example, the Dow up more than 20 percent, as you were showing, you know, we still have to keep in mind that the Dow Jones industrial's still down more than 30 percent over the last year.

So while we've been able to shake off a little bit of this recession, at least when it comes to stocks, it's anyone's best guess until when we're actually going to be totally and completely out of it.

WALLACE: Liz, let's talk about the one part of the economic picture that is just unadulterated bad news, and that's unemployment, which is now already at 8.5 percent and still climbing. Best guess — are we headed for double-digit unemployment? Are we headed for plus- 10 percent?

CLAMAN: Chris, we're already there. Hate to spoil everybody's Easter parade, but if you take into account part-time workers, not to mention those so-called discouraged workers who have given up looking for jobs, unemployment is actually at about 15.6 percent. That's the worst it's been since 1994.

I'm not — I'm not a pessimist. I'm just a realist. And I think that that's very important to keep the American public informed about that. Double-digit unemployment rate — that clean rate of 8.5 percent — it will happen. It will go to that point. And of course, as we all know, unemployment is always the last thing to turn around, because companies take that long to decide, "OK, I'm ready to turn around and start adding to my payrolls once again. I finally have the confidence." They don't right now. And those are the guys in the trenches facing a very serious and very tough business condition out there.

Jenna makes that point about that consumer who is also among the unemployed in many regards. And if you're not unemployed, you certainly have that fear of losing your job out there. I know a lot of people who are watching your show right now might have that concern, Chris.

And that also affects people's spending habits. It tends to feed upon itself. We will get out of this. And as you've seen the Obama administration taking some major steps that start to actually show some indications — for example, mortgage applications are moving higher. More people are applying for mortgages. Small business loans are up for the past month.

But again, are we covering up the real problem? Are we allowing that sort of natural decay and renewal process that we see on the forest floor, for example, to take place in the business world? No. We're pumping sick, sick businesses like AIG — filled with Botox to make them look better, but the fact is it's still an ugly picture for some of these companies.

WALLACE: Jenna, of course the Obama administration is saying that its policies are responsible for at least these glimmers of hope.

And I want to offer an analysis that came from Forbes.com this week. It came from two economists, Brian Westbury and Robert Stein, and here's what they wrote. "The stock market and the economy are being lifted on a sea of liquidity, giving us a V-shaped recovery. Very soon the recession will officially end. This is not a dead-cat bounce and it's not government spending. It's easy money, plain and simple."

Jenna, are they right? Is the Fed the driving force here, not the White House?

LEE: I think it's really tough to know, Chris. I know this analogy is over used, but the idea of a patient going into an emergency room, and all you're focused on, if that person is our economy, is trying to get that person out of the E.R. and start to stabilize again.

The Fed, the Treasury, the president all have put together these different plans, whether it's focused on stimulus for the consumer or the Federal Reserve to kind of loosen up the credit markets.

At this point, it's going to be very tough to know, once we stabilize the economy, what has actually worked. We do know a lot of these plans — as was mentioned, we are seeing mortgage applications up, refinancing applications up, but these are just applications. We don't know if they've actually been approved. And that's going to be key — is that while we see these glimmers of hope, is there actually follow-through? A V-shaped recovery is more of an optimistic look at things. That would be a swift downturn and a really speedy upturn.

It's going to take a couple months to whether or not we actually — actually have facts for this. Again, there's so many different opinions. But it's going to be tough to know, as we're treating this economy, what actually works, what is actually the tipping point to snapping it out of a recession.

WALLACE: Liz, of course, all of this started not with the recession but with the financial crisis. You mentioned a moment ago the fact that Wells Fargo reported record profits for the first quarter last week, which is one of the reasons that the stock market went up at the end of the week.

Where are the banks now? Are they solvent? Are they going to need billions more in bailouts?

CLAMAN: Well, there is a conventional wisdom and sort of a skepticism on behalf of some people on Wall Street to say, "Absolutely, they will need more money." Then you hear Lloyd Blankfein of Goldman Sachs come out and say that we're solid, we're stable, Wells Fargo saying the same thing.

There's nothing I would like more than to believe that. But again, I go back to what's still on the balance sheets. You've got, again, about $3.2 trillion in things like corporate and leveraged loans and everything else that hasn't been taken into account, not to mention — this gets a little wonky, but you know, you have a lot of investment banks who lent a lot to private equity.

These are the guys who are out there trying to buy distressed businesses and then turn them around and sell them. Well, it got so heady and exciting in 2004, '05, '06, that these banks — they wanted to just lend to the private equity guys, so they didn't have backstops put in, those so-called safety nets and making sure these private equity guys had some collateral. So they were just lending. All of that is now coming to roost.

So I think that there is some real trouble still on the horizon for banks. But we haven't seen a bank failure since Lehman Brothers. But again, is that a false sense — is that too much Federal Reserve money and stimulus money and TARP money going in to lift up a very sick — to keep Jenna's analogy of a patient in there — to keep that sick patient alive?

WALLACE: Finally, Jenna, we've got about a minute left. The president and Treasury Secretary Geithner are talking about these public- private investment funds, partnering up with hedge funds and private equity companies, to buy the toxic assets.

Do the banks still need that help? And are they going to be able to agree with the investment funds on a price to get these toxic assets off their books?

LEE: You've hit on the great unknown — is the pricing of all of this. It's just like if you go into a store and you see something on the sale rack. You have to ask yourself a question as a consumer whether or not it's actually worth that sale price or maybe it's worth less than that.

That type of thought that a consumer goes through every single day is similar to the type of bargaining you're going to see between the government and some of these private institutions. The price and whether or not the private institutions are willing to sell at that price those toxic assets, and whether or not there's a buyer — that's a great unknown.

We still have to establish that pricing before we even know if this program is going to work.

WALLACE: Jenna, Liz, we're going to have to leave it there. We want to thank you both for your analysis, and we'll bring you both back soon.

CLAMAN: Happy holidays, Chris. Thank you.

LEE: Happy Easter.

WALLACE: Thank you. Same to you.

And you can catch more of Liz, Jenna and their colleagues by tuning in to FOX Business Network. Go to foxbusiness.com and check their channel finder to see where to find the business network in your area.

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