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Research Says

Judi Fulbright blog photo

Is it a recovery yet?

August 6, 2009

While there’s not a crystal ball available to forecast exactly when the economic downturn will end, recently published their Recovery Index composed of six key economic indicators. When three of the six indicators have positive results, then the likelihood of an emerging economic recovery becomes stronger. The key indicators include:

Interest-rate spread, a reflection of lending risk, is the difference between the yield on risk-free, three-month Treasury bills and LIBOR, the rate at which banks lend to each other. It has been added to the Conference Board’s Leading Economic Index.

Existing home sales, the number of single-family homes, condos and co-ops sold each month, released each month by the National Association of Realtors.

Retail sales are based on the value of goods sold by all retail outlets, reported by the U.S. Census Bureau.

Consumer Confidence Index, available from the Conference Board, is a gauge of how consumers are feeling about the economy and their personal finances.

Durable goods orders are reported monthly by the U.S. Census Bureau and reflect new orders for long-lasting manufactured goods (like furniture, appliances, etc.)

Jobless claims are weekly reports on the number of first-time unemployment claims filed nationwide released by the U.S. Department of Labor.

So how is the economy doing? So far, as of July 30, two of the key indicators are showing positive results; interest-rate spread and existing home sales. To monitor these signposts yourself, sign up for the Kiplinger Recovery Index E-mail Alerts.

On a far-less serious note, in June introduced another set of barometers of the economy, with its 10 Quirky Economic Indicators. By taking clues from everyday life on how people are handling the recession, much can be learned about where the economy really stands. For instance, the National Gardening Association reported the number of households growing their own fruits, berries, vegetables or herbs will be 19% higher this year than in 2008. According to the National Association of Theatre Owners, the number of movie tickets sold in the first quarter of 2009 has increased 9% from last year; it’s cheap out-of-the house entertainment. The 2009 Sleep in America Poll discovered nearly one-third of Americans lost sleep due to worrying about financial problems. Customers are visiting drycleaners less frequently and delaying pick-up to postpone paying the bill.

Conducting my own research in the everyday world, I asked my hair dresser recently about business. She told me that ladies (and gents) are waiting longer between color or curl appointments but timing on haircuts has remained about the same. What can you add to the list of quirky economic indicators?