Signs of recession's end

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A number of economists predict that the recession could last into 2010 and that unemployment will top 10%. If the crisis does not deepen into an even longer downturn, there will have to be early signs that the credit crisis is ending and that consumer and business confidence is coming back.

A recession, by one common, shorthand definition, is two consecutive quarters (or more) of declining gross domestic product, adjusted for inflation.
Here signs of recession end

1) Indexes of leading economics indicator
We can use one of devices The "S&P 500" generally quoted is a price return index; there are also total return and net total return versions of the index. These versions differ in how dividends are accounted for. The price return version does not account for dividends -- it only captures the changes in the prices of the index components. The total return version reflects the effects of dividend reinvestment
The first thing to watch for is the S&P 500 to trade flat for three months. While it continues to move down, investors are expecting two or three more quarters of bad earnings. If it spikes up too early, a rally probably cannot be sustained. A flat market at least indicates that investors are becoming more at ease with the economy.
Another devices is economic indicators produced by the Conference Board (conference-board.org). The index declined for a fourth straight month in January. "It doesn't suggest we are in a recession yet," says Ataman Ozyildirim, economist for the Conference Board. It does suggest increased risk of recession, Ozyildirim says. The leading indicators typically go positive about four months before a recession ends.


2) The sharp rise in unemployment is worrisome, but this often peaks near the end of an economic downturn. The last three months have been terrible, but service sector losses are not getting worse.

3) Housing starts. The downturn in housing has led the economic slowdown. A rise in housing starts would indicate a recovery in that sector, Wyss says — and, possibly, an economic recovery

4) Consumer spending. Consumer spending rose marginally in February. Especially for car sales, The rise is “consistent with comments we had heard around mid-January from various auto finance companies about double-digit sequential increases in loan application

4) China's GDP has to stop falling and hold at a level of 6% growth. If it drops well below that, it means that demand for inexpensive manufactured goods in the U.S., U.K., and E.U. has dried up completely. If China economic expansion holds, even at levels that are low compared to the last decade, there is a sign that economic activity in the West still has a pulse.

5)From a global perspective, the trading in bonds for developing countries that might default on their debt, nations such as Ireland and Ukraine, need to stop changing hands at distressed levels. If the bets on these nations being able to shoulder that own national financial obligations improve, it is a sign that global credit is becoming available, at least at the sovereign level, and that the IMF has been able to get commitments from the "richer" nations to provide credit to those that are in trouble

"We've passed the period where every indicator is plummeting, and that's good news," "We may not be exactly at the turning point, but we're getting pretty close to it."

Source : wikipedia, Chinapost, USA Today, Time, Wall Street Journal

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2 comments

  1. http://businessvartha.blogspot.com  

    April 9, 2009 at 3:16 PM

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  2. http://businessvartha.blogspot.com/  

    April 9, 2009 at 3:20 PM

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