In your sentence, "that" is only used as a conjunction; the use restrictive/non-restrictive clauses is when "that" is used as a "relative pronoun" (and not as a conjunction). Quick examples:

"that" as a conjunction:

James said that he would play tennis.

"that" as a relative pronoun (restrictive clause):

The car that is red in color recently met with an accident.

EducationAisle wrote:In your sentence, "that" is only used as a conjunction; the use restrictive/non-restrictive clauses is when "that" is used as a "relative pronoun" (and not as a conjunction). Quick examples:

"that" as a conjunction:

James said that he would play tennis.

"that" as a relative pronoun (restrictive clause):

The car that is red in color recently met with an accident.

So you meant that "that clause" is referring(subordinate) to :

1: reflect
2: will avoid

If i go with what you have just written, it means that in second instance "that clause" will refer/SUBORDINATE to "will avoid".

but actually "feared" has a direct object "recession" to which the clause "that many had feared .." is referring to.

Please clarify?

Actually I was referring to the "first" instance of "that" being a conjunction.

Indeed, the second instance of "that" (...will avoid the recession that many had feared..) marks the beginning of a restrictive clause.

EducationAisle wrote:Actually I was referring to the "first" instance of "that" being a conjunction.

Indeed, the second instance of "that" (...will avoid the recession that many had feared..) marks the beginning of a restrictive clause.

Good! we are in agreement on the second instance of "that clause".

Now coming back to the first instance of "that clause", i think it is also "restrictive"( even though it is incorrectly used).

Generally, there are two types of "that clauses": (1)NOUN like, (2) ADJECTIVE like

Example for (1):
I believed THAT you were good in cricket, but I was wrong.
"that clause " is DIRECT OBJECT here
Example for (2):
I need a car that can go 20 miles in 1 hour.
"that clause" here is RESTRICTIVE and ADJECTIVE for "CAR".

In my earlier example,
"the gains in the stock....."
The first instance of "that clause" cannot be a Direct object of "reflect" because already "growing confidence" is used as direct object. so "that clause" can only act as ADJECTIVAL(restrictive) to "confidence", leading to an ABSURD MEANING.

Indeed we are on the same page on most things except that I don't believe that clause is restrictive in the first case.

As you have mentioned, following is the kind of construct for restrictive:

I need a car that can go 20 miles in 1 hour.

I need a car..which car? The one (restricting that out of all the cars, I want the car) that can go 20 miles in 1 hour.

On the other hand, in an example like this:

Bad results shattered the hope that company would recover.

Here, that company would recover is just extending or explaining the hope. It is equivalent to saying:

Bad results shattered the hope of company's recovery.

This is fundamentally different from the example of restrictive clause that we considered above: I need a car that can go 20 miles in 1 hour.

If we were to interpret that that is being used in a restrictive sense, it would imply that there were (perhaps) many hopes that out of those hopes, the one that got shattered was the hope of company's recovery. To me, this interpretation sounds specious.