Uber-bear Gary Shilling, president of A. Gary Shilling & Co., says the recent improvement in economic activity was not a sign the worst has passed.

It's a head fake that's typical in most recessions, Shilling told Yahoo! Finance.

Three trends must emerge in order to declare the end of the downturn, Shilling says: A housing bottom, resolution of the financial crisis, and more stimulus.

Shilling wants to see a serious reduction in the excess inventory of homes.

He’s also concerned about the rise in bad loans in sectors other than residential mortgages, including commercial real estate, auto loans, student loans, and credit cards.

Shilling estimates that only about $200 billion of the stimulus package actually went into things that will stimulate the economy and says that government must do more to "break the cycle of a consumer who is cautious, which means less spending, less production more inventory problems, and more layoffs."

If these three trends occur, he expects the recession will end in 2010.

Even then, “we're going to see a distinct contrast of lower growth," Shilling warns. "Not a depression, not 'recession forever', but muted, lower growth."

Pimco co-CEO Mohammed El-Erian also expects that economic growth will be muted for the foreseeable future.

“The world has changed in a manner that is unlikely to be reversed over the next few years,” El-Erian wrote in a note following his company’s recent annual secular outlook forum.

“For markets that are highly conditioned by the most recent periods of ‘normality,’ this will feel like a new normal.”