In early 2009, the Conference Board's consumer confidence index was 70 per cent below its previous low of December 1974. Household confidence was obliterated. Many healthy households (those that had a job, an income and manageable debt burdens), paralysed by fear, stopped spending. Job losses were a real problem in the recession, but so was the fear-based freeze of 90 per cent of households that never lost their job. These now find themselves with excess savings (for a depression that wasn't) and postponed purchases. Household cash has risen to almost $7,500bn and is near a 20-year high in relation to disposable income. Armed with panic-induced savings, pent-up demands and cash hidden in their mattresses, as confidence slowly improves households may prove a surprising force for future growth.

Finally, the "debunking of crisis fears" also seems to be driving the stock market. It was driven from its recession low in March 2009 because fears of a second depression were discredited. Similarly, since late last year, the stock market has struggled with another crisis fear - vulnerability to a double-dip recession. However, is the current push in the S&P 500 towards 1,200 the start of another rally driven by the debunking of double-dip fears? Even if double-dip concerns fade, they will likely be replaced by the ultimate investment fear created by the 2008 crisis - "a new-normal (and perpetually sub-par) economic recovery". Discrediting this last fear may be some time off, but it represents further upside potential for stock investors.

While excessive fear made the recession much worse, it also may help produce a much better than anticipated recovery. The panicky posturing of our leadership scared many into economic paralysis, but the massive economic stimulus may also produce a strong recovery. Businesses preparing for a depression surely made the recession worse, but a reversal of this corporate purge should boost recovery growth and elevated profit leverage could keep surprising most earnings forecasters. The legacy of excessive household fear is improved savings, stronger pent-up demands and a mountain of cash.

Finally, the financial market panic leaves investors woefully under-exposed to stocks, with easy-to-beat expectations, a large pool of liquid-asset buying power and a stellar outlook for profits.

David Fuller's view If Robin Griffiths frightened you, Jim Paulsen provides the antidote. I take nothing for granted but market action currently favours Paulsen's view. Fullermoney will stay bullish while major stock markets continue to walk, talk and act like bull trends, without showing signs that they are accelerating into bubbles.